The money-market fund industry is experiencing rapid growth as the Federal Reserve maintains interest rates at a steady level.
According to data from Crane Data LLC, as reported by Bloomberg, the total capital invested in money-market funds has reached a record high of $7.4 trillion, with an influx of $320 billion in 2025 so far.
Money-market funds provide individuals with the opportunity to invest in low-risk, short-term debt securities, such as US Treasuries.
Deborah Cunningham, the chief investment officer for global liquidity markets at Federated Hermes, believes that the Federal Reserve’s current monetary policies indicate further growth for the money-market industry, potentially reaching $7.5 trillion in assets by the end of the year.
“Five-percent-plus rates were nirvana, four-percent-plus is still very good – and if we dip down into the high threes, that’s quite acceptable as well.”
Last week, the Federal Open Market Committee (FOMC) announced its decision to keep the federal funds rate target range at 4.25-4.5%, citing it as the most suitable level for achieving maximum employment and controlled inflation. The Fed has maintained interest rates unchanged since December, when it reduced the rate by 0.25%.
Michael Bird, a senior fund manager at Allspring Global Investments, notes that the growth in asset levels in the money-market sector is not unexpected.
“Even if the Fed continues its easing measures this year, rates will still remain relatively high…”
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