Federated Hermes (​UK) posted a video update which asks, "How can Money Market Funds ensure liquidity as well as an attractive yield?" It'​s description states, "Joanne Bartell, Portfolio Manager for Liquidity, outlines why money market funds can potentially outperform traditional bank deposits, how combining trader and portfolio manager roles can boost investment decision making, as well as providing a perspective on the current cash management landscape." Moderator Tara Dougherty asks, "​Flows have been pretty strong into money market funds as of late. If we focus on the sterling market for now, why do you think investors are choosing money market funds over bank deposits?" Bartell responds, "There are a number of advantages for clients investing in money market funds as opposed to just placing their cash into an overnight deposit with the bank. Money market funds aim to achieve a return over and above bank base rates. Money market funds tend to be able to do this by adding duration but still enabling investors to get access to the cash as same day liquidity. Historically, money market funds can be at premium with a yield, in a rate-​cutting environment. For example, we'​re in the cutting environment with Bank of England. They may cut next month; they may cut in February. But when you see the Bank of England cut a rate or any central bank, the interest rate is immediately passed onto the customer via the bank ... they lower their interest rate immediately. With the composition of a money market portfolio, you'​ll find that our yield slightly lowers due to the composition and the extra duration that we can offer but still offering same-​day liquidity." She adds, "The other thing is we'​re talking about yield, which is important, but capital preservation is our primary objective. This is our main focus. We only invest in high-​quality, highly rated, good liquidity assets over a short duration period. We also have a very conservative credit list. So combine all of those factors, it basically reduces or alleviates some of that market volatility or our exposure to the market volatility that we’​ve seen in past years." Bartell also tells us, "We have a dedicated money market credit team which is comprised of seven or eight analysts that purely work on money market credit. Every day we'​ll have a credit update -- we'​ll look at any credit overnight news, any rating agency changes -- so, we'​re always fully aware of where we are, and we'​d never invest without being fully sure where we'​re going to be investing. We work within the parameters, and we manage to maintain a high yield using those parameters.... Each day, we monitor markets continuously, review economic data, any overnight news, any rating changes, any credit moves, and then we'​ll look at the yield curve -- so we'​ll look at maybe two points on the yield curve, depending on where we sit with the central bank'​s monetary policy -- and invest where we find value. This provides a bit of comfort to our client base." Finally, she adds, "​We'​ve got an investor base that we'​re very comfortable with. Our fund has no internal cash -- it'​s generally made up of investors. We have certain clients that move in the same way, so they have liabilities at the same point of the month, so we position our portfolio to work with them. We'​ll have excess liquidity, and we'​ll buy at these points where we find value. And obviously when we lose that cash, we know we'​re going to lose that cash.... We have inflows generally at the beginning of the month and outflows generally at the end of the month. But we'​re fully planned for that so we position our portfolio accordingly."

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