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Interest rates are falling but people still buy money market funds
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The Federal Reserve's rate cut will reduce investor returns, yet money market funds remain a good deal.
ILLUSTRATION: PETER AND MARIA HOEY/NYTIMES
Jeff Sommer
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Money market funds seem to be defying gravity. They are paying less in interest to investors but becoming more popular.
Given a choice, people usually want more for their money, not less. Yet since the Federal Reserve began pushing short-term interest rates down more than a year ago, investors have been funnelling hundreds of billions of additional dollars into these funds.
