From mid-2023 onward, flows were increasingly driven by institutions seeking a haven from potential volatility in equity markets and longer-term fixed income markets. During a period of heightened macroeconomic and geopolitical uncertainty — marked by trade wars and actual wars — institutional investors were reminded of the enduring value of security, liquidity and operational certainty.
In short, yield is no longer the sole or even the primary rationale for holding cash in these vehicles. MMFs have instead become a strategic defensive sleeve within cash portfolios.
Moreover, inflows now reflect a mix of retail and institutional cash, with a notable new contributor: corporate cash from the unprecedented cycle of AI-related capital raising.
The scale of that fundraising since the beginning of 2025 has been astonishing. Technology giants including Amazon AMZN.O, Alphabet GOOGL.O, Meta META.O, Microsoft MSFT.O and Oracle ORCL.N issued more than $121 billion in new debt during 2025 alone. That was more than four times the average annual issuance of the preceding five years.
This wave of capital raising has continued into 2026, with SpaceX SPCX.O, Alphabet and SK Hynix 000660.KS together raising nearly $200 billion from equity markets.
Much of that capital is not immediately deployed. As companies prepare to direct proceeds into vast capital-expenditure programmes — such as building data centres, securing chip supply and expanding compute capacity — they are sitting on record piles of cash in the interim.
As AI investment accelerates, the companies at the centre of that spending will likely need to raise even more capital — through both debt and equity markets — to fund the next wave of infrastructure build-out. Each new raise creates another tranche of cash awaiting deployment, and money market funds are well positioned to capture at least part of that liquidity in the interim.
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