Investors are still flocking to cash funds, and Bank of America Corp. strategists say history suggests redemptions won’t begin until a year after the Federal Reserve starts cutting interest rates.
Money-market fund flows rose in anticipation of the first cut over the past five rate reduction cycles, before inflows slowed meaningfully when the central bank actually started cutting rates, a team led by Michael Hartnett wrote in a note. Outflows began 12 months later, they said.
Investors are still in the phase of pouring into cash funds, which received $82 billion in the week through Wednesday, according to the BofA strategists who cited EPFR Global data. Money-market funds are annualizing $1.2 trillion of inflows, the second highest ever.
Cash funds have been seeing massive inflows for several months, far above other asset classes like equities, showing investors likely missed out on the S&P 500’s 34% rally since the start of 2023.
Stocks have been climbing amid optimism about artificial intelligence developments and an economy that’s held up better than expected in the face of interest rate hikes. But shares weakened on Thursday as rising oil prices and a series of hawkish comments from Fed officials spooked traders.
Investors had poured $7.1 billion into US stocks in the week ahead of the sell-off, the note showed. US equity flows are annualizing to $310 billion, the second highest ever. Tech stocks are annualizing $73 billion, an all-time high.
B Capital and pension giant CalPERS lead a consortium buying the 90-year-old asset manager from TA Associates and Reverence Capital Partners.
Using artificial intelligence can have benefits for both advisors and their clients, according to new research.
Broker-dealers that sold the defunct securities backed by Inspired Healthcare generated more than $100 million in fees and commissions.
FINRA barred the advisor, Sung Moo Cho, last month.
A new MetLife survey finds real estate professionals are increasingly steering clients toward tax experts as rising property values leave more sellers facing significant capital gains.
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.
