Understanding the Risks of Money Market Funds Compared to T-Bills

Priorities 1a and 1b for treasurers managing corporate cash are safety and liquidity. While yield is a close second, the returns generated on funds are generally thought of as a value add. In evaluating where to allocate cash, treasurers must carefully weigh risks versus rewards, with Money Market Funds (MMFs) and U.S. Treasury bills (T-bills) being two of the most popular vehicles for a healthy balance. Given volatility is inevitable, ensuring safety across all economic environments is essential. Here’s a breakdown of the characteristics of both options and the risks involved in times of market stress.