Money market funds (MMFs), especially those primarily invested in US Treasuries, can be an attractive option for investing cash. Depending on the market’s projection of future rates, they may or may not offer attractive yields.

However, they also come with credit risk (the underlying securities aren’t worth as much), market risk (the market decides to put a lower value on MMFs), and liquidity risk (in a stressed case, ability to redeem cash is curtailed). And as of September 2023, recent efforts to render MMFs more resilient to market pressures, SEC rules have likely increased the price risk faced by those choosing to place funds in MMFs, especially if they need those funds during times of crisis.

As a result, companies often use Mayfair to complement their MMF holdings and diversify their cash position. Some companies prefer the ability to earn attractive yields while holding cash at FDIC-insured banks to ensure they maximize liquidity and minimize risk.