Late to the party: Are the best of money market returns behind us?

As short-term rates have risen, investors have flocked to money market funds as a low-risk option to access higher yields. While short-term money market funds can offer attractive yields, we believe there could be a hidden danger for investors in being underexposed to duration assets as interest rates hit peak levels. Historically, duration assets have outperformed money market funds once the federal funds rate has peaked, while also providing much-needed defensive characteristics during times of market stress.