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Money-Market Fund Yields Soar to 16-Year High

Good news for savers: Money-market funds are offering the most attractive yields in around 16 years.

The average yield on 100 of the largest money-market funds tracked by Crane Data recently hovered at 5.13%, the highest level since 2007.

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Investors have taken note, sending assets in such funds to $5.9 trillion, the most on record.

Money-market funds are considered low-risk and invest in short-term debt, such as U.S. Treasury bills. They are seen as “cash equivalents” that investors can easily access.

For years after the 2008 financial crisis, investors held on to the belief that “there is no alternative” to stocks–or TINA–for high returns. Now, there are alternatives—including one that’s yielding 5%.

Contrary to what many expected just months ago, stocks have climbed alongside yields in some of the safest investments this year. Many investors predicted that higher Treasury yields and an aggressive interest-rate hiking cycle would lead to a big sell-off in stocks. Instead, riskier assets have climbed alongside bond yields.


Image: Banking