A small Texas bank is trying to reinvent the money market fund for a new era, but financial advisors may take some time to warm up to the idea. Texas Capital launched a Government Money Market ETF (MMKT) in late September, taking aim at an asset class that has boomed since the Federal Reserve began hiking rates in 2022. Total money market fund assets have ballooned to more than $6.
5 trillion, according to the Investment Company Institute. The firm's theory is that the increased liquidity of an ETF relative to traditional money market funds will be attractive to money managers, especially with accounts that don't allow margin trading. Traditional money market fund transactions take place at the end of each trading day, while ETFs trade constantly during market hours.
The ETF will also be more transparent than traditional funds because it will disclose holdings daily. But some financial advisors told CNBC that stability is a top priority when using money market funds, not liquidity, which could create hesitation in taking up a new type of fund. "It might be more relevant for day traders and people that are really doing stuff in a quick fashion, but most money managers and financial advisors are pretty long-term oriented.
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A day isn't really going to make a difference," said Michael Carbone, wealth manager at Eppolito Financial Strategies in Chelmsford, Mass. After a little less than a month, the fund has about $40 million in assets, according to FactSet. That's not bad for a.
