Cash is having its moment in the sun as risk assets whipsaw.
Exchange-traded funds holding bonds that mature in a year or sooner have posted inflows of nearly $36 billion this year as the Federal Reserve tightens the reins on red-hot inflation, Bloomberg Intelligence data show. That haul surpasses the previous record of $34.2 billion, set during the central bank's last tightening cycle.
Even the shortest-term debt has enticed money managers far and wide as risk assets shudder as the Fed hikes interest rates and shrinks its balance sheet. One-month Treasury bills now yield 2.75% — levels so juicy that Bridgewater Associates founder Ray Dalio tweeted Monday he no longer thinks "cash is trash" and that the short-term interest rate is "now about right."
That mindset has fueled a record sum of money into cash-like ETFs, many of which are reliably paying out monthly dividends again.
"For the first time since the global financial crisis, you can actually get paid something nominally for being in short-term bonds," said Dave Nadig, financial futurist at data provider VettaFi. "So, cash seems reasonable, for the first time in a very long time."
The $25 billion SPDR Bloomberg 1-3 Month T-Bill ETF (ticker BIL) has led the way with a $11.2 billion influx so far in 2022, on track for a record annual inflow. Meanwhile the $23 billion iShares Short Treasury Bond ETF (SHV) has also taken in over $10 billion so far this year, closing in on its 2018 record of $12.7 billion.
