(Bloomberg) -- Money-market fund assets surged to a fresh all-time high as interest rates north of 5% and traders' pricing of the first Federal Reserve cut to its target benchmark spurred institutional investors to shift more cash to the industry.
About $73 billion flowed into US money-market funds in the week through Nov. 29, according to Investment Company Institute data. That's the largest weekly inflow since failures in the US banking system drove depositors out of the banks in March. Total assets jumped to $5.836 trillion from $5.763 trillion the week prior.
Retail investors have been piling into money funds since last year, when the Fed began one of the most-aggressive tightening cycles in decades. Institutional investors tend to wait until interest rates have peaked or are starting to fall. Fund managers have been quicker to pass on the benefits of higher rates than banks.
Earlier this month, officials kept their main policy rate unchanged between 5.25% and 5.5%, the highest in 22 years. Fed Chair Jerome Powell hinted the US central bank may now be finished with the most aggressive tightening cycle in four decades after it held off on raising interest rates for a second consecutive policy meeting. Yet bond traders have been ramping up their bets on an abrupt end to the central bank's tightening cycle.
In a breakdown for the week to Nov. 29, government funds — which invest primarily in securities like Treasury bills, repurchase agreements and agency debt — saw assets rise to $4.77 trillion, a $71.5 billion increase. Prime funds, which tend to invest in higher-risk assets such as commercial paper, meanwhile, saw assets climb to $940 billion, a $2.19 billion increase.
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