The big fixed-income winners with rising interest rates were investors and savers who kept their cash in high-yielding money market funds. The minute the rate cut dropped and hit the tape, Wall Street banks began slashing rates on the popular funds. Many fell as much as 50 basis points in a week.
The bad news for conservative investors is that the fed funds rate will likely drop another 50 basis points before the end of 2024 and another 100 basis points in 2025. Funds yielding 4.5% will likely fall to 2.5% by the end of next year.
We decided to screen our 24/7 Wall St. fixed income database, figuring there had to be some excellent alternatives for investors. While we discovered four or five contenders, one clear-cut winner came to the forefront after crunching the numbers and weighing all the different items, like management fees.
This post originally appeared at 24/7 Wall St.