Amid the recent banking crisis, investors have been redirecting their portfolio investments towards money market funds in the United States, with over $286 billion being injected into these funds so far in March, according to data from Emerging Portfolio Fund Research (EPFR) obtained by the Financial Times. The top beneficiaries of this surge in cash are Goldman Sachs, JPMorgan Chase, and Fidelity, with Goldman Sachs’ money funds experiencing a 13% growth and receiving $52 billion, while JPMorgan’s funds received almost $46 billion and Fidelity saw inflows of nearly $37 billion.
This level of inflow is the highest for a month since the emergence of the Covid-19 outbreak. Money market funds are known for offering high liquidity and low risk, making them a popular choice for investors during uncertain times. Additionally, the best yields in years are currently being offered by these funds as the U.S. Federal Reserve continues to increase interest rates in order to control inflation.
This surge in inflows is believed to be driven by fears about the health of the financial system as banks in the U.S. and Europe face liquidity constraints due to monetary policy tightening. Charles Schwab and Capital One are among the regional banks experiencing uncertainty, with insurance on default for these financial services firms soaring.
