LOS ANGELES, Oct. 20, 2025 (GLOBE NEWSWIRE) — As the Federal Reserve begins cutting rates, yields on money market funds are declining. For investors seeking safety, liquidity, and enhanced income, low duration bond strategies present a compelling solution, according to Kerry Rapanot, CFA, Director and Low Duration Portfolio Strategist at Payden & Rygel.
“As the Fed lowers rates, low duration strategies offer a timely, balanced approach—providing yield, stability, and flexibility for investors ready to move beyond cash,” said Rapanot.
Key Takeaways
- Money market fund balances have reached $7.7 trillion, up $1 trillion over the past year and $3 trillion since the pandemic.
- Despite talk of a “wall of cash” moving into equities, history shows cash remains sticky even after the Fed begins cutting rates.
- As rates fall, yields on money market funds decline—creating opportunities further out the curve.
Why Low Duration Strategies
Low duration portfolios offer enhanced yield potential compared to money market funds or bank deposits. By investing in bonds maturing within five years, investors can lock in longer-term yields and benefit from price appreciation as rates drop. These strategies provide diversification across Treasuries, corporates, and structured credit generating higher total returns while maintaining liquidity.
Comparing Low Duration and Money Market Funds
While yields on money market funds are falling, low duration bond strategies offer the potential to earn more over time. Although current portfolio yields may be lower due to the inverted yield curve, this dynamic will shift as the curve disinverts. Low duration portfolios also benefit from active yield curve management and diversified exposure across the fixed income universe.
Liquidity in low duration portfolios remains comparable to money market funds, as these strategies invest in high-quality Treasuries and top-tier credit. Bonds typically mature within five years, providing both liquidity and the opportunity to benefit from price appreciation as rates decline.
Managing Risks
Low duration strategies carry modest price volatility due to longer maturities and credit exposure, yet the short-term nature of the holdings helps limit risk. As bonds near maturity, prices tend to pull to par, helping stabilize returns. Active management ensures portfolios remain liquid while participating in total return opportunities.
About Kerry G. Rapanot, CFA
Kerry Gawne Rapanot is a director and member of the Low Duration Strategy leadership team at Payden & Rygel. She oversees investment strategy development, implementation, and risk management for the firm’s liquidity-oriented and ultra-short portfolios. Rapanot has 24 years at the firm and 30 years in the investment industry.
About Payden & Rygel
Founded in 1983, Payden & Rygel is one of the largest privately-owned global investment advisers, managing approximately $165.7 billion in assets. The firm specializes in the active management of fixed income and equity portfolios, serving a diverse range of institutional clients worldwide, including central banks, pension funds, foundations, and corporations. Headquartered in Los Angeles, the firm also maintains offices in Boston, London, and Milan.
To learn more, visit www.payden.com.
This material reflects the firm’s current opinion and is subject to change without notice. Sources for the material contained herein are deemed reliable but cannot be guaranteed. This material is for illustrative purposes only and does not constitute investment advice or an offer to sell or buy any security. Past performance is no guarantee of future results.
Media Contact: Kate Ennis, DAI Partnerspr.com, [email protected], (301)580-6726
A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/e6a9fcaf-7e01-42c4-8d8a-c0bc0d096a98
This press release was published by a CLEAR® Verified individual.