U.S. fund investors charge into money market funds: Lipper

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., February 13, 2019. REUTERS/Brendan McDermid

NEW YORK (Reuters) – U.S. fund investors added another $18.7 billion to money market funds during the latest week, likely putting the low-risk funds on track for a third straight quarter of positive demand, Lipper data showed.

Money market funds based in the United States have taken in nearly $29 billion so far in 2019 after pulling in nearly $209 billion during the last half of 2018, Lipper said. The research service’s latest data covered the seven days through Feb. 13.

Investors have favored these low-risk alternatives to bank accounts due to recent stock market volatility and relatively attractive yields, analysts said.

The Federal Reserve has raised rates from historic low levels in recent years, helping returns on low-risk financial assets.

The growth in money market fund assets has enticed companies to issue more commercial paper purchased by some of those funds as a source of cash, resulting in lower borrowing costs for banks and Wall Street.

Precious metals commodities funds, which invest in gold and are sometimes seen as an alternative to cash in periods of turmoil or high inflation, recorded $414 million in withdrawals during the week. That was the most cash pulled from those funds since September.

Funds based in the United States but invested primarily in Chinese stocks recorded $31 million in withdrawals during their first week of withdrawals of the year.

The Trump administration’s top two negotiators in trade talks with China will meet on Friday with Chinese President Xi Jinping, but there has been no decision to extend a March 1 U.S. deadline for a deal, White House economic adviser Larry Kudlow said on Thursday.

Reporting by Trevor Hunnicutt; Editing by Phil Berlowitz

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