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Investors Are Holding Record Amounts Of Cash

Investors are holding record amounts of cash as they wait for signs that stock markets have bottomed, according to data from the Investment Company Institute.

Total net assets in money market funds rose to $4.81 trillion U.S. in the week ended January 4, 2023. That surpasses the previous high of $4.79 trillion U.S. set in May 2020 during the earlier months of the global pandemic.

The cash holdings include money market fund assets held by both retail and institutional investors.

Investors worried about corporate earnings and rising interest rates appear willing to wait before they put money back into stocks.

At the same time, money market funds are now generating a few percentage points of interest for the first time in years.

Fidelity Investments’ Government Money Market Fund, for example, has a compounded effective yield of 3.99% and generated a 1.31% return in 2022.

The Investment Company Institute is a global association of regulated funds, including mutual funds, exchange-traded funds, and closed-end funds that is based in the U.S.