: The ‘super surge’ of money market funds is on with yields over 4.6% luring savers. Here’s what you need to know. 

by | Apr 16, 2023 | Stock Market

Last month’s bank failures, combined with a healthy yield advantage over bank deposit accounts, has prompted a “super surge” of assets into money market mutual funds, according to research firm Crane Data.  Money market funds, which invest in very short-term, high-quality debt, in March enjoyed their third-best month of inflows ever, according to Crane, as investors spooked by the banking turmoil poured about $345 billion into these funds. While the 25 largest U.S. commercial banks saw deposits climb $18 billion in March, smaller banks’ deposits dropped $212 billion, according to Federal Reserve data. 

The 100 largest taxable money funds tracked by Crane yield more than 4.6% on average, while the average rate on savings accounts nationwide is 0.37%, according to DepositAccounts.com, a unit of LendingTree.   The flood of cash into money market funds, which now have a record of more than $5.6 trillion in assets, is a major break from the typical pattern at this time of year, when investors tend to pull cash from money funds to make tax payments. Traditionally, “March and April are the two weakest months of the year” for money funds, said Peter Crane, president of Crane Data. “This i …

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