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Money-market funds: A net $44 billion was withdrawn from these funds last month, marking a reversal from the $39 billion in net deposits in December. Money-market funds are designed to be safe harbors where investors can temporarily park cash and quickly access it when needed. However, their appeal has been reduced because returns have been barely above zero
-- they're now averaging 0.03 percent -- for about three years. Money fund returns are closely tied to interest rates. Prospects of higher returns dimmed last month when the Federal Reserve said it doesn't expect to raise its benchmark rate until late 2014, at the earliest, because the economic recovery remains fragile. Exchange-traded funds: Investors deposited a net $28 billion into ETFs, which bundle together investments in a particular market index. It was the biggest monthly intake for ETFs since September 2010, when they also attracted $28 billion in new cash. Unlike mutual funds, ETFs can be traded during daily sessions just like stocks. ETFs continue to grow much faster than mutual funds, with net deposits totaling $115 billion last year. It was the fifth consecutive year that ETF flows have topped $100 million.
[Associated
Press;
Copyright 2012 The Associated
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