Investors are piling into cash at their fastest pace since the pandemic, unnerved by a series of bank runs while seeking out higher interest rates at money-market funds.
During the first quarter this year, investors poured $508 billion into cash funds in their largest quarterly inflow since the early days of Covid-19 three years ago, according to Bank of America Corp. strategists citing EPFR Global data.
More than $100 billion have flocked into money-market funds in the past two weeks alone, they said.
“Dash for cash continues,” wrote strategists led by Michael Hartnett in a note on Thursday, pointing to $60.1 billion being added to the asset class this week. Meanwhile, equity funds continued to see outflows, with $5.2 billions of redemptions.
Bank runs that led to the collapse of Silicon Valley Bank and other smaller lenders, as well as UBS AG’s shock rescue of Credit Suisse Group AG earlier this month, have heightened fears about the state of the banking system and fueled investors’ risk aversion and appetite for liquid assets. Interest rates at 16-year highs have added to the influx into money-market funds and away from traditional deposits.
Assets in US money-market funds have now reached a record $5.2 trillion, according to data from the Investment Company Institute, with more than $300 billion of that added in the three weeks to March 29.
This article was provided by Bloomberg News.