Investors rotate their funds amid the banking crisis
Investors face uncertainty about the health of the financial system, which is why they have started a rotation of funds
The banking crisis caused a reorganization of the investments of the investors in the last two weeks. According to EPFR data obtained by the Financial Times, more than $286 billion has been invested in US money market funds in March.
The main beneficiaries of this influx of money have been Goldman Sachs, JPMorgan Chase and Fidelity, with Goldman Sachs money funds receiving $52 billion, a growth of 13 %. Money market funds offer high liquidity and low risk, making them a popular choice for investors in uncertain times.
The US Federal Reserve continues to raise interest rates to curb inflation, which has led to money market funds offering their best returns in years. During a seven-day period ending March 22, the money market fund’s total assets increased by $117.42 billion to $5.13 trillion.
Money market inflows are driven by fears over the health of the financial system, as banks in the US and Europe face liquidity squeezes amid tightening of monetary policy.
Deutsche Bank shares fell on March 24 as the cost of insuring against its potential default risk increased. In the United States, uncertainty still hangs over regional banks, as default insurance for financial services firms Charles Schwab and Capital One skyrocketed last week.
(Reference image source: file)
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