This is Debbie Cunningham Chief Investment Officer for Liquidity Markets at Federated Hermes.
Why should investors consider money market funds in this environment?
It's really the same basic reasons that investors continue to use money market funds on a regular basis. Those three main reasons are safety, liquidity, and stability. From a safety perspective, the investments in a money market fund represent high quality, short-term minimal credit risk issuers, and the diversification and quantitative and qualitative health in the liquidity markets for the issuers is immense. For Federated Hermes liquidity products, we've added qualitative ESG assessments that are included as part of our credit rating process, and these we believe have been helpful to our continuous monitoring of the high quality nature of these issuers, making their healthiness on a conformational basis higher. From a liquidity perspective, Federated Hermes liquidity product investors have been and will continue to be able to invest or withdraw depending upon their needs, their cash investments on a T plus zero basis daily.
The published information that we provide on our daily and our weekly liquidity is much more helpful to investors and affirms to them our commitment to this liquidity space and liquidity within our portfolios. And when we have chaotic markets that follow, you know, global pandemics and panics like we've had with COVID-19, the money markets really continue to provide a safe haven and a flight to quality area where investments are good for both institutional and retail investors alike. Finally, when you look at the stability of the price that we have in these types of securities and these types of products, and you look at the yield perspective, liquidity funds provide investors with a stable price and they also provide a market yield that's reflective of whatever the market conditions are. At this point, the very low risk of their high quality markets and the recent Fed moves, investors should be confident that they are reflecting that current monetary policy, which is very low in the zero to 25 basis point range. But as the economy adjusts upward, as the world exits the recession, and the effects of the lockdown and the coronavirus, we would expect products like the liquidity products and the rates in those markets to follow Fed action upward.
Disclosure: Views are as of 4-29-20 and are subject to change based on market conditions and other factors. These views should not be construed as a recommendation for any specific security or sector. Past performance is no guarantee of future results. You could lose money by investing in money market funds. Although some money market funds seek to preserve the value of your investment at 1.00 USD per share, they cannot guarantee they will do so. An investment in money market funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The funds' sponsor has no legal obligation to provide financial support to the funds, and you should not expect that the sponsor will provide financial support to the funds at any time. Investors should carefully consider the fund's investment objectives, risks, charges and expenses before investing. To obtain a summary prospectus or prospectus containing this and other information, contact us or visit FederatedInvestors.com. Please carefully read the summary prospectus or prospectus before investing. ESG is a reference to Environmental, Social, and Governance investing. Federated Securities Corp. 20-40221 (5/20)