Investors Choose Liquidity: How Money Market Overtook Bond Funds

In the summer, private investors of VIM Investments began to actively choose money market instruments, the company told RBC Investments. In July, they sent й4.4 billion to these instruments, the highest volume since the beginning of the year, and in August they invested another й3.4 billion. In both months, money market inflows exceeded bond funds by more than three times.

In January-August, clients of VIM Investments placed almost х25 billion in money market instruments, which is 19% more than in the same period last year. The volume of investments in bond funds over the same period increased by 32%, to жен28.7 billion. Combined inflows to these two categories reached 53.7 billion, an increase of 26% year-on-year.

During the summer months, investor preferences changed. In June, ,3.7 billion was sent to money market instruments – 42% more than to bond funds, which received ,2.6 billion. In July, the gap widened: .4.37 billion against .1.41 billion, respectively. In August, customers invested й3.43 billion in the money market, while inflows to bond funds amounted to й987 million.

Thus, the share of the money market in the aggregate inflows in the two categories in the summer rose from 59% in June to 76% in July and 78% in August. For comparison: in January-August, the money market accounted for 46.5% of total investments in cash and bond instruments, and bond funds - 53.5%.

Bond funds are a popular tool for investors who, in the rate reduction phase, want to record current high returns for the long term and are willing to take interest rate risk. In the summer months, customer flows shifted markedly in favor of money market funds. These instruments allow you to place free funds at a rate comparable to the key rate of the Bank of Russia, and to maintain flexibility for further rebalancing of the portfolio in case of changes in expectations for the rate and the situation on the debt market, said Sergey Dudin, Director of the Portfolio Investment Department at VIM Investments.

The demand for the money market may indicate that some investors prefer not to make a one-time bet on the change in bond yields. Instead, they retain liquidity, waiting for clearer signals on the trajectory of interest rates and further financial market dynamics.

Under the management of VIM Investments is the largest BPIF Liquidity (LQDT), the value of net assets exceeds ых 789 billion. The fund occupies about 36% of the BPIF money market.

The material is purely informative and does not contain individual investment recommendations.