Treasurers stick with money-market funds in uncertain environment
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Treasurers stick with money-market funds in uncertain environment

Proposed regulatory changes will not dull treasurers’ appetite for money-market funds, even if interest rates are cut more aggressively than expected.

Financial risk assessment / portfolio risk management and protection concept : Businessman holds a white umbrella, protects a dollar bag on basic balance scale, defends money from being cheat or fraud
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Inflows to UK money-market funds in November 2023 totalled £525 million, bringing the amount allocated to these funds in the first 11 months of last year to more than the total for the previous eight years combined, according to data from funds network Calastone.

It is the same story on the other side of the Atlantic, with around $1.2 trillion finding its way into US money-market funds between January and November last year, pushing total assets to an all-time high.

While much of this demand came from retail investors rather than corporate treasurers, the latter are expected to up their allocations this year too.

Money-market funds were a firm fixture in the top-buys lists for Hargreaves Lansdown clients during 2023 – a development described as concerning by the firm’s head of investment analysis and research, Emma Wall.

Cash can be a great tactical tool to have in a portfolio... but it just doesn’t pay over the long term
Emma Wall, Hargreaves Lansdown

“Cash can be a great tactical tool to have in a portfolio – in a rising rate environment coupled with stock-market volatility, you can be rewarded for keeping your powder dry and make use of it when the right opportunities arise,” she says.

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