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.