The second half of 2021 could prove both dull and exciting, depending on a variety of factors: debt ceiling resolution, a taper tantrum, money fund regulation, and crypto or stable coins. In the first half of the year, we saw continued growth in cash holdings. With those cash increases, came challenges of excessive balances presenting to both banks and money market funds. The Federal Reserve’s (Fed) Quantitative Easing purchase program continues to add approximately $120 billion of new reserves (cash) each month and the money markets have reached a point of saturation that could pose a problem. How is too much cash a problem? Banks can no longer store funds for their clients due to swelling balance sheets and the impact of required regulatory capital and liquidity ratios. Some of this cash has flowed into money market funds and other short-term debt investments causing certain rates to reach zero and negative yields. As investors continue to seek returns above zero, they reach out on the duration curve and down the credit curve. This additional risk could pose a challenge should rates become more volatile.
You should obtain and read a Key Investor Information Document and Prospectus relating to the SSGA Cash funds prior to investing. Further information, including the annual and semi-annual reports and the Key Investor Information Document and Prospectus describing the characteristics, charges, expenses and risks involved in your investments are available for residents of countries where SSGA cash funds are authorized for sale, at www.ssga.com/cash and from your local SSGA office or by calling +44 (0)20 3395 2333.
Investing involves risk including the risk of loss of principal. It is possible to lose money by investing in the funds.
Before investing, carefully consider a fund's investment objectives, risks, charges and expenses. Click the link to obtain a prospectus which contains this and other information, or by calling +44 (0)20 3395 2333, please read it carefully before investing.