As Rates Peak, Money Funds Pique; Returns Near 5% as Fed Hikes Add Up
Here's a sure sign that interest rates are topping out: People are getting excited about money-market mutual funds.</br></br>After five years of going nowhere on balance, the amount of money in these plodding short-term savings and cash-management vehicles has lately begun to increase.</br></br>As money-fund yields have steadily climbed toward 5 percent from less than 1 percent a little more than two years ago, you can hear the drumbeat picking up in the financial press. "Money market heats up," declared one headline. "Money fund rates shine again," said another.</br></br>"Money fund articles are too numerous to list this month," Peter Crane of Crane Data LLC reports in the July issue of his newsletter Money Fund Intelligence.</br></br>As a confirmed fan of money funds since they arrived on the scene three decades ago, I see plenty to like in these developments. So- called cash investments can be an excellent stabilizer in a money- management plan, and money funds can be a great way to hold a cash position.