THE GIST
NEWS AND FEATURES
Global Philippines Fine Living
INSIGHTS
INVESTMENT STRATEGY
Economy Stocks Bonds Currencies
THE BASICS
Investment Tips Explainers Retirement
WEBINARS
2024 Mid-Year Economi Briefing, economic growth in the Philippines
2024 Mid-Year Economic Briefing: Navigating the Easing Cycle
June 21, 2024
Investing with Love
Investing with Love: A Mother’s Guide to Putting Money to Work
May 15, 2024
retirement-ss-3
Investor Series: An Introduction to Estate Planning
September 1, 2023
View All Webinars
DOWNLOADS
grocery-2-aa
Economic Updates
Inflation Update: Prices rise even slower in May 
DOWNLOAD
Buildings in the Makati Central Business District
Economic Updates
Monthly Recap: BSP to outpace the Fed in rate cuts 
DOWNLOAD
economy-ss-9
Economic Updates
Quarterly Economic Growth Release: 5.4% Q12025
DOWNLOAD
View all Reports
Metrobank.com.ph Contact Us
Follow us on our platforms.

How may we help you?

TOP SEARCHES
  • Where to put my investments
  • Reports about the pandemic and economy
  • Metrobank
  • Webinars
  • Economy
TRENDING ARTICLES
  • Investing for Beginners: Following your PATH
  • On government debt thresholds: How much is too much?
  • Philippines Stock Market Outlook for 2022
  • No Relief from Deficit Spending Yet

Login

Access Exclusive Content
Login to Wealth Manager
Visit us at metrobank.com.ph Contact Us
Access Exclusive Content Login to Wealth Manager
Search
THE GIST
NEWS AND FEATURES
Global Philippines Fine Living
INSIGHTS
INVESTMENT STRATEGY
Economy Stocks Bonds Currencies
THE BASICS
Investment Tips Explainers Retirement
WEBINARS
2024 Mid-Year Economi Briefing, economic growth in the Philippines
2024 Mid-Year Economic Briefing: Navigating the Easing Cycle
June 21, 2024
Investing with Love
Investing with Love: A Mother’s Guide to Putting Money to Work
May 15, 2024
retirement-ss-3
Investor Series: An Introduction to Estate Planning
September 1, 2023
View All Webinars
DOWNLOADS
grocery-2-aa
Economic Updates
Inflation Update: Prices rise even slower in May 
June 5, 2025 DOWNLOAD
Buildings in the Makati Central Business District
Economic Updates
Monthly Recap: BSP to outpace the Fed in rate cuts 
May 29, 2025 DOWNLOAD
economy-ss-9
Economic Updates
Quarterly Economic Growth Release: 5.4% Q12025
May 8, 2025 DOWNLOAD
View all Reports
Rates & Bonds 3 MIN READ

Fed jumbo rate cut puts pressure on money market fund investors

September 23, 2024By Reuters
Related Articles
EMERGING MARKETS-Asian currencies weaken on geopolitical concerns March 14, 2022 Nasdaq hit by system error affecting stock orders December 14, 2023 Philippines raises $96 mln from 91-day T-bills, rejects bids for other bills March 28, 2022

Investment advisers are urging clients to dump hefty cash allocations now that the Federal Reserve has begun its much-anticipated interest-rate easing, a process they expect to limit the appeal of money-market funds in the coming months.

Retail investors’ assets in money market funds have grown by USD 951 billion since 2022, when the Fed started its rate-hiking cycle to tame inflation, according to the Investment Company Institute, which represents investment funds. Their assets stood at USD 2.6 trillion on Sept. 18, roughly 80% higher than at the beginning of 2022. Total money market assets stood at USD 6.3 trillion.

“As investors are now more convinced that the Fed will reduce rates in line with its guidance, investors will likely grasp for yields that will not dwindle overnight,” said Hannes Hofmann, head of the family office group at Citi Private Bank, adding appetite for risk is likely to increase.

On Wednesday, the US central bank cut the federal funds rate by a larger-than-usual 50 basis points to a range of 4.75% to 5%, which makes holding cash in deposit accounts and cash-like instruments less appealing.

“You’re going to have to shift everything … further up in the amount of risk you’re accepting,” said Jason Britton, Charleston-based founder of Reflection Asset Management, who manages or oversees around USD 5 billion in assets. “Money-market assets will have to become fixed-income holdings; fixed income will move into preferred stocks or dividend-paying stocks.”

Money-market funds – ultra-low-risk mutual funds that invest in short-term Treasury securities and other cash proxies – are a way to gauge investor interest in the nearly risk-free returns they offer. When short-term interest rates climb, money-market returns rise with them, increasing their appeal to investors.

“Investors may need to look at something different, or longer-term, to lock in rates and not be as exposed to the Fed lowering interest rates,” said Ross Mayfield, investment strategist at Baird Wealth.

Some investors could end up transferring funds from money market funds to equities, advisers say. Daniel Morris, Chief Market Strategist, BNP Paribas Asset Management, said the appeal of money market funds will wane. Morris said he sees better opportunities in equities and is slightly overweight equities versus fixed income.

Carol Schleif, chief investment officer of BMO Family Office, expects investors to keep some cash on the sidelines to wait for opportunities to buy stocks.

It could take a while for initial reactions to the Fed’s decision on Wednesday to show up in money-market fund flows, as it has been tough to persuade retail investors to abandon their cash holdings, analysts note. Assets in money market funds tend to peak nine months after the first rate cut, BofA Securities said in a report.

“If people see a broader-based advance in stocks, they may move out of cash more quickly, as that would point to owning riskier assets as a good thing,” said Christian Salomone, chief investment officer of Ballast Rock Private Wealth.

Investors “are stuck between a rock and a hard place,” Britton said, faced with a choice between investing in riskier assets or earning a smaller return from cash-like products.

(Reporting by Suzanne McGee and Carolina Mandl; additional reporting by Davide Barbuscia; Editing by Megan Davies, Rod Nickel, and Nick Zieminski)

 

This article originally appeared on reuters.com

Read More Articles About:
Worldwide News Philippine News Rates & Bonds Equities Economy Investment Tips Fine Living

You are leaving Metrobank Wealth Insights

Please be aware that the external site policies may differ from our website Terms And Conditions and Privacy Policy. The next site will be opened in a new browser window or tab.

Cancel Proceed
Get in Touch

For inquiries, please call our Metrobank Contact Center at (02) 88-700-700 (domestic toll-free 1-800-1888-5775) or send an e-mail to customercare@metrobank.com.ph

Metrobank is regulated by the Bangko Sentral ng Pilipinas
Website: https://www.bsp.gov.ph

Quick Links
The Gist Webinars Wealth Manager Explainers
Markets
Currencies Rates & Bonds Equities Economy
Wealth
Investment Tips Fine Living Retirement
Portfolio Picks
Bonds Stocks
Others
Contact Us Privacy Statement Terms of Use
© 2025 Metrobank. All rights reserved.

Read this content. Log in or sign up.

​If you are an investor with us, log in first to your Metrobank Wealth Manager account. ​

If you are not yet a client, we can help you by clicking the SIGN UP button. ​

Login Sign Up