A small Texas bank is trying to reinvent the money market fund for a new era, but financial advisors may take some time to warm up to the idea. Texas Capital launched a Government Money Market ETF in late September, taking aim at an asset class that has boomed since the Federal Reserve began hiking rates in 2022. Total money market fund assets have ballooned to more than $6.5 trillion, according to the Investment Company Institute.
One key distinction is that the Texas Capital fund is not designed to have a stable net asset value. Many traditional money market funds are designed to always trade at $1, which is why a decline to "break the buck" by one fund in 2008 caused chaos in financial markets. "My concern is, of course, the fact that not only can it go up in net asset value, it can also go down," said Richard Leimgruber, private wealth advisor at Onyx Bridge Wealth Group in Tarrytown, New York.