This weekend, Barron's features a "Fund of Information" article, entitled, "Active Funds' Kings of Cash," contains a segment on money market funds. Reshma Kapadia writes, "[M]eager yields in short-term bond funds and on cash ... have pushed investors further afield in their quest for income.... Investors have used short-term bond funds to park cash, but money intended as dry powder for a market correction or needed within a year should be in more liquid options, such as money market funds, which are emerging from a decade-long funk during which they paid next to nothing. The Fed's initial interest-rate hikes didn't filter through to all money funds, in part because some firms were still recouping fees they had waived to keep yields positive.... But now, most of those fee waivers are gone, and the average yields for the 100 largest money-market funds tracked by research firm Crane Data is 1.12% and rising, versus just 0.43% at the end of 2016. "Nothing is worth doing unless you get at least 1% out if the shift," says Crane Data's Pete Crane. And that tipping point is here, with the yield expected to hit 1.5% as the Fed raises rates further this year. As if often the case, some of the highest yields are in the institutional share classes, which can be accessible through advisors, but require higher minimum investments. Crane's retail picks include: Vanguard Federal Money Market (VMFXX), which yields 1.24%, Fidelity Government Cash Reserves (FDRXX), 0.99%, and Schwab Investor Money (SWRXX), 1.19%."
