Why this $6 trillion pile of cash isn't heading for stocks any time soon

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There are trillions of dollars parked in money-market funds and other cash-like investments collecting about a 5% return. It may take awhile to be deployed...

Even with U.S. stocks in a new bull market, investors aren’t showing many signs of backing away from money-market funds and other cash-like investments offering yields of about 5%, the highest in about 15 years.

While the Federal Reserve’s interest rate rises may have created carnage in stocks and bonds last year, it also set up money-market funds to quickly reflect higher yields associated with the central bank’s monetary tightening cycle to combat inflation. While the end of the bear market hinges on the index closing at least 20% above its bear-market low, it doesn’t guarantee it from slipping back, particularly if a U.S. recession unfolds.

“There’s no correlation to assets in money funds and the stock-market,” he said, adding that instead institutional players like corporations mostly use money-market funds to deal with their cash balances.

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