Navigating the Pros and Cons of Money Market Funds

Money market mutual funds are paying high interest rates, making them an attractive option for investors looking to park their cash. However, their growing popularity is coming at the expense of smaller banks, which are losing deposits and creating stress in the financial system. Money market funds are also vulnerable to "runs" and have had near misses in the past. To minimize risk, investors should diversify their holdings and understand the potential perils associated with money market funds.