U.S. money market fund balances have reached record levels, exceeding $8 trillion. Many investors have viewed this large cash position as “dry powder” waiting to be deployed into equities, potentially providing fuel for the next leg of the bull market. However, this conclusion may be misleading. When comparing money market balances relative to the size of the S&P 500 market capitalization, cash levels are actually near historical lows. This suggests that even if investors begin moving some of that cash into equities, the impact may not be large enough to represent a significant new wave of buying.
This graph was produced by Lucas Juery, CFA, CFPⓇ and is not intended to provide financial advice.
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