- Over $286 billion has made its way into money market funds in March, The FT reported.
- "We are seeing shifts into money market funds by every segment of investor," Goldman Sachs said.
- Bank deposit outflows have risen to $17.5 trillion, and have notched $5.4 trillion at smaller banks.
Depositors' search for a safe haven has led to a $286 billion surge into money market funds in the past two weeks, The Financial Times reported.
The rapid rate of inflows has set a monthly record not seen since the early days of COVID-19, and boosted funds' overall assets to $5.1 trillion last week.
After Silicon Valley Bank collapsed on March 10 and raised initial fears about deposits' safety, three firms saw the biggest money market gains: $52 billion went to Goldman Sachs, $46 billion to JPMorgan and $37 billion to Fidelity.
"We are seeing shifts into money market funds by every segment of investor," Goldman Sachs Asset Management Ashish Shah told FT.
Such funds have become increasingly attractive as high interest rates boost returns on safe assets relative to stocks and other investments. And though data shows that institutional investors are leading the shift to money market funds, retail investors are also getting involved.
Investors are especially focusing on funds holding government debt, commonly seen as the safest investment and increasingly offering relatively high returns. This month, short term US government bond yields reached a peak of 5.25%.
"While money market funds are not guaranteed, they invest in the safest and most liquid instruments," JPMorgan analysts wrote last week. "In other words, not only are money market funds offering superior yields, but they also look safer than bank uninsured deposits."
Meanwhile, outflows from bank deposits have risen to $17.5 trillion through March 15, and have reached $5.4 trillion at smaller banks.
This comes as depositors flee turmoil in the banking sector following the fall of Silicon Valley Bank, with many opening new accounts with "too big to fail" banks in recent weeks.