Archive · 12 Aug 2026
Investors' Cash Hoards Create $3 Trillion Headache for Wealth Managers
Many people who save money are keeping a very big pile of it in safe accounts called money-market funds.
In fact, people have more than $3 trillion sitting in these funds right now.
Money experts want people to move that cash into stocks, bonds, and other investments instead.
They worry that cash won't grow fast enough to beat inflation, which is when prices go up.
A man named Don Ross, who used to fly airplanes for a living, likes keeping cash because it makes him feel safe.
He keeps 85% of his money in stocks and the rest in cash to help him if the stock market drops.
Some experts suggest bonds, but Don thinks bonds are a bad deal because they haven't earned much lately.
Others suggest special funds that protect against losses, but those charge extra fees.
In the end, the money experts and the people saving money just don't agree on what to do with all that cash.
Retail investors hold over $3 trillion in money-market funds, near a record high, according to the Investment Company Institute.
Money-market funds, which average 3.49% yields per Crane Data, attracted assets after the Federal Reserve's 2022 rate hikes pushed yields above 5%.
Wealth managers such as David Royal of Thrivent and Todd Stankiewicz of Sykon Capital are pitching bond ladders, municipal bonds, and buffer ETFs as alternatives to cash.
Advisers warn that cash yields may not keep pace with inflation, but investors like retired airline pilot Don Ross remain wary after losing money in both stocks and bonds in 2022.
Ross, 75, keeps 85% of his portfolio in stocks and the rest in cash yielding 3.62% to weather what he expects to be short bear markets.
- Who
- Retail investors such as retired airline pilot Don Ross, along with wealth managers including David Royal of Thrivent and Todd Stankiewicz of Sykon Capital.
- What
- Wealth managers are trying to persuade investors to move more than $3 trillion held in retail money-market funds into investments like bonds, buffer ETFs, and private credit.
- When
- Currently, with retail money-market fund assets near a record high following the Federal Reserve's rate hikes beginning in 2022.
- Where
- United States, where Federal Reserve policy, U.S. Treasury bonds, and state income taxes are referenced.
- Why
- Advisers argue cash yields may not keep pace with inflation and want to earn fees, while investors remain cautious after 2022 losses in both stocks and bonds.
Wealth Managers' View
Investors' View
What to do with idle cash
Wealth Managers' View
Holding too much cash is risky because money-market yields won't keep pace with inflation; investors should put money to work and capture the diversification benefits of bonds.
Investors' View
Cash is a safe cushion; investors like Don Ross remember 2022 losses in both stocks and bonds and note the 10-year annualized return on Vanguard's bond ETF is just over 1%, making bonds unattractive.
Complex alternative products
Wealth Managers' View
Buffer ETFs and private credit offer downside protection and potentially higher yields than money-market funds, and buffer ETFs are cheaper than bank-issued structured notes.
Investors' View
These products are complex, carry fees of 0.79%-0.89% or more, and if the stock market underperforms money-market yields, investors would have been better off staying in cash.
- Retail money-market fund assets
- Over $3 trillion, near a record high (Investment Company Institute)
- Average money-market fund yield
- 3.49% (Crane Data)
- Money-market yields after 2022 rate hikes
- Rose above 5%
- Don Ross's portfolio split
- 85% stocks, 15% money-market fund yielding 3.62%
- Municipal bond yields
- Around 4%, generally exempt from federal income tax
- Buffer ETF example
- Innovator Capital Management August offering: 8.37% upside cap, 100% downside protection, fees 0.79%-0.89%
- Vanguard total bond market ETF 10-year return
- Just over 1% annualized