The run on Silicon Valley Bank and the cascade of bank troubles in March spooked depositors, who withdrew billions of dollars from bank accounts. Much of their money ended up in money-market mutual funds. Investments in money funds skyrocketed by about $67 billion during the first three weeks of March, according to the Investment Company Institute.
Money funds hold low-risk, short-term investments, such as Treasury bills and other government securities, commercial paper and certificates of deposit. Although money funds are relatively safe, they are not as safe as their bank-version equivalents— money market deposit accounts (MMDAs), which are insured by the Federal Deposit Insurance Corp. (money market funds are considered securities and are protected by SIPC insurance).
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