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The writer is a former investment banker and author of ‘Power Failure: The Rise and Fall of an American Icon’
In the last 10 years, both retail and institutional investors have swarmed into US money-market mutual funds, supposedly a safe place to park money in the short term while figuring out what else to do with it. At the moment, some $5.6tn of cash sits in these funds, according to the Investment Company Institute, up from $2.6tn a decade ago.
Is this something to worry about, or just a reflection of the human instinct to creep up the risk scale in exchange for a higher yield? According to Crane Data, the top-yielding money-market funds are these days offering investors an annual return of around 5 per cent.
Investors have noticed. According to…
