New York May 28 2023: Investors have poured $756 billion into cash funds this year, Bank of America said in a note on Friday, attracted by juicy yields and driven by concerns about banks.
The rush into money market funds continued in the week to Wednesday, with $23.1 billion flowing into the cash-like instruments, according to BofA, which cited figures from financial data company EPFR.
Rising interest rates have pushed up the yields available on money market funds, which are mutual funds that invest in highly liquid short-term debt, such as that issued by governments.
The collapse of a handful of mid-sized U.S. banks this year has caused many people and companies to pull their money out of bank deposits and put it into MMFs.
BofA's note also showed that interest in tech stocks continued, with $500 million flowing into tech stock funds in the sixth straight week of inflows.
The tech-heavy Nasdaq U.S. stock index (.NDX) has risen around 25% this year, boosted by excitement about artificial intelligence.
Overall, however, stock funds saw their third straight week of outflows, at $3.9 billion.
Bond funds saw inflows of $9.5 billion in the week to Wednesday. That took total yearly inflows to $152 billion, BofA said.
The flow into cash funds is rapidly approaching 2020 levels, when COVID-19 spooked investors and $917 billion made its way into money market funds.