Retail investors take shelter in cash after stock market rout

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Almost US$140 billion has poured into money market funds as traders sit on the sidelines. Read more.

“It has been one of these years where everyone has gotten torched and it really is an environment where you feel like you don’t want to put your toes in the water,” said Joe D’Angelo, who runs asset manager PGIM Fixed Income’s money market business.

“For individuals, for the first time in a long time, you can get some return,” Steve Sosnick, chief strategist at Interactive Brokers LLC, said of the funds. “For years we’ve heard ‘there is no alternative,’ but now there is an alternative.” The withdrawals have been driven in part by companies spending the excess they built up to weather the pandemic. Analysts at Goldman Sachs Group Inc. last month warned that “cash balances are back to pre-pandemic norms” for both blue-chip companies and riskier, junk-rated businesses.“Corporate cash has been used to pay down debt, used to invest in their businesses and with inflation things are more expensive,” said Matt Jones, head of liquidity distribution at Western Asset Management Co.

 

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