Fed jumbo rate cut puts pressure on money market fund investors

The article discusses how investment advisers are encouraging clients to reduce large cash holdings as the Federal Reserve begins cutting interest rates, reducing the appeal of money-market funds. Since 2022, these funds have seen $951 billion in inflows, driven by high interest rates. With the Fed lowering its rate to 4.75%-5%, advisers suggest reallocating to riskier assets for better returns. Retail money-market fund assets, which grew to $2.6 trillion by September 2024, may lose attractiveness as rates decline.