Money market minute

Private markets have been rapidly growing in recent years and are projected to grow to more than $20 trillion by 2030. This growth has been bolstered by the continued democratization of private markets and increased accessibility to a broader investor base.

We saw a sharp rebound in private equity deal-making last year after several challenging years of inflation and rising interest rates. Inflation has moderated and interest rates continue to remain elevated.

Private market firms are looking for new ways to stay competitive, and with rates elevated, managers are looking to take a more active approach to cash management strategies.

What are money market funds (MMFs) and how may they be considered in the private markets sector?

MMFs are typically regulated mutual funds that seek to offer capital preservation and same-day liquidity. Private market firms may use MMFs to manage short-term liquidity—such as holding cash between capital calls, fund closings, or investment opportunities.

MMFs are designed to offer liquidity and seek to preserve capital, which may make them a potential option for interim cash management needs.

Investors should evaluate whether MMFs are appropriate for their objectives, risk tolerance, and time horizon, as MMFs are not risk-free and returns are not guaranteed.

Why money market funds play a vital role in private markets

Just released: Private market firms are looking for new ways to stay competitive, and with rates elevated, managers are looking to take a more active approach to cash management strategies.

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The technology that facilitates money market fund orders has evolved dramatically over the years. From faxes to files and now looking forward to potential tokenization, reducing friction is key for investors. In fact, you might be surprised to hear, current research shows that investors spend less than 3 minutes placing a trade online*.
*BlackRock Cachematrix as of May 2025

Emerging technologies impact how we work and how we expect our digital platforms to perform. And when it comes to cash management, where high-value trades can happen every day, efficiency and data-driven decisions are critical.

We understand that different types of investors require different technology solutions. Open architecture trading technology helps us meet investors where they are by offering configurable solutions that fit their unique investment goals, risk profiles and liquidity needs across the global money market fund universe.

However, as the Head of Aladdin reminds us, our work is never done. Our to-do list will continue to be driven by the feedback, ideas and roadmaps we co-create with clients.*
*Sudhir Nair, Global Head of Aladdin, 2025 Annual Aladdin White Paper, The Way Forward

In fast-moving markets, investors require responsive cash management technology. Continuous innovation and agile product delivery help enable us to deliver dynamic and scalable solutions that help m eet our clients’ needs. By expanding our offering across more and more regions, we aim to support investors in reaching their liquidity goals on a global scale.

Especially, in times of market volatility, enhanced risk management, robust reporting, and simple investment processes are more important than ever before. We like to call that being ‘FinTechReady.’

At BlackRock Cachematrix, our mission is to ensure technology empowers all investors, helping more and more people achieve financial well-being.

Are you FinTechReady?

06/13/2025: Emerging technologies impact how we work and how we expect our digital platforms to perform. When it comes to cash management, where high-value trades can happen everyday, efficiency and data-driven decisions are critical.

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[00:00:06.24] In the current economic environment, which is characterized by potential rate cuts, interest rates remain relatively high and we believe there are opportunities for money market fund investors.

[00:00:15.92] When rate cuts are priced into the market and there is an inverted yield curve, active short duration positioning can help ensure that money market funds continue to offer competitive risk-adjusted returns.

[00:00:27.44] Additionally, monetary policy loosening may lead to increased liquidity in the financial system, which typically creates ample supply of high-quality short-term securities.

[00:00:39.92] During periods of economic volatility, we believe that active cash management is critical to clients overall investment strategy.

[00:00:48.28] All investors have a cash need.

[00:00:50.68] It is important to effectively manage liquidity across different rate cycles to take advantage of same-day liquidity, diversification, operational ease and active duration management.

[00:01:01.84] Money market funds invest in high quality debt securities, which provide relatively stable and low risk opportunities to earn returns on cash reserves.

[00:01:11.32] Although rate cuts might lower the yields on short term investments, money market funds hold a mix of securities with varying maturities.

[00:01:19.72] Their ability to blend shorter and slightly longer dated securities can help balance yield and risk, and adapt to changes in the interest rate environment with more flexibility.

[00:01:30.20] Money market funds generally closely reflect central bank rate changes due to their direct investment in short term securities.

[00:01:36.96] However, a lag often exists between rate cuts and the decline in money market fund yields due to the mix of maturities in their portfolios as securities mature and are replaced by lower yielding ones, money market fund yields adjust over time.

[00:01:52.72] As the broader economic environment evolves, clients should review their specific goals and investment time horizons, and seek money market investments that provide liquidity, stability, and opportunity for yield.

[00:02:02.16] that provide liquidity, stability, and opportunity for yield.

[00:02:04.48] These qualities may help to optimize cash returns and build more resilient portfolios to more effectively navigate market fluctuations.

Liquidity in the wake of falling rates

09/20/2024: In the current economic environment, which is characterized by potential rate cuts, interest rates remain relatively high, and we believe there are opportunities for money market fund investors.

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