The Wall Street Journal again mentions money market funds in, "Jittery Investors Turn to Cash in Hunt for Yield." They explain, "The dash for cash on Wall Street is back on. Investors have added about $135 billion to global money-market funds over the past four weeks, according to EPFR data through Jan. 18. That is the best stretch since the four-week period ended May 2020, when those funds logged roughly $175 billion in net inflows. A money-market fund is a form of mutual fund that invests in short-term debt securities including Treasury bills and commercial paper. Companies and consumers often use them like checking accounts to store their ready cash."
The piece continues, "Increased cash allocations are the latest sign of caution among investors who are questioning whether the recent rebound in stocks and bonds will continue after last year's steep selloff. Many expect markets to remain volatile because Federal Reserve officials have repeatedly said they are committed to fighting inflation with higher interest rates. The flows are also an indication that investors are hungry for yield. They shunned cash for years when interest rates were low and returns on money-market funds were meager."
The Journal also says, "Last year red-hot inflation, higher interest rates and worries about a potential recession rattled everything from stocks to bonds to gold. The S&P 500 declined 19%, while a basket of U.S. Treasurys, highly rated corporate bonds and mortgage-backed securities dropped 13%. Suddenly, holding cash looked appealing again."
They quote Jimmy Chang, CIO of Rockefeller Global Family Office, "Throughout most of the last decade, cash earned you nothing. In fact, there was a saying: Cash is trash. It's no longer trash. In fact, it's king."
The article states, "The average return on U.S. money-market funds this month is 4.12%, the highest yield since the 2008 financial crisis, Crane Data show. The S&P 500, on the other hand, has a dividend yield of about 1.6%. The index is up 4.6% so far in January. By the end of December, assets sitting in money-market funds hit a record $5.18 trillion, Crane Data going back to 2006 show. That surpassed the previous high of $5.16 trillion from May 2020."
It adds, "Money-market funds received a flood of assets in March 2020 at the onset of the Covid-19 pandemic, and inflows remained elevated for the next two months. Investor interest started building again last fall, and the funds have seen inflows in seven of the past 10 weeks. Mr. Chang has recommended that clients lower their stockholdings and add to their cash positions to have dry powder ready to deploy for an attractive buying opportunity.... Yield is 'being handed to us in the form of the safest asset in the world,' Mr. Zappia said [about T-bills]."
Finally, the piece says, "In December, individual investors slightly lowered the share of cash in their portfolios to about 21.8%, below the historical average of roughly 22.5%, according to a survey by the American Association of Individual Investors. The reading still marks one of the highest levels since May 2020. In comparison, stock and stock fund allocations are at about 63.9%, above the historical average of around 61.5%."
In other news, a press release entitled, "Gabelli U.S. Treasury Money Market Fund Exceeds $3 Billion in AUM" tells us, "Gabelli Funds, LLC is pleased to announce that the Gabelli U.S. Treasury Money Market Fund (GABXX) exceeded $3 billion in assets under management.... Achieving this milestone reinforces the Fund's reputation as a low cost money market fund as it continues to grow while providing shareholders with tax advantaged returns."
It continues, "The Gabelli U.S. Treasury Money Market Fund is among the most attractive money market funds in its class. The quality of U.S. Treasury securities coupled with total expenses capped at 0.08% and the exemption from state and local income taxes of its dividends, translates into a very competitive after-tax yield."
The release adds, "The Gabelli U.S. Treasury Money Market Fund is a money market mutual fund managed by Gabelli Funds, LLC, a wholly owned subsidiary of GAMCO Investors, Inc.... The Fund invests exclusively in U.S. Treasury securities and its primary objective is high current income consistent with the preservation of principal and liquidity."
