Money Market Fund Commentary (Government Securities Money Market Fund & U.S. Treasury Fund)

2Q 2023

Market overview

The good times continued to roll for the money market fund industry as the Federal Reserve (The Fed) continued to raise interest rates. From the start of the Fed’s monetary tightening campaign in 2022 to June 30, 2023, the federal funds target range was raised 500 basis points (5.00%) to 5.00%-5.25%. At quarter end, the Crane 100 Money Fund Index yielded 4.95%, up from a paltry 0.02% in February 2022.

The attractive yields have not gone unnoticed. Domestic money market fund assets rose by $6.9 billion in June, according to Money Fund Intelligence, and ended at a staggering $5.861 trillion. Over the past 12 months, assets have risen by $875.9 billion, or 17.6%. Bank deposit products, according to a May Money Fund Intelligence article, typically yield less than 1%. This fact, together with investor angst in the wake of problems with Silicon Valley Bank and Signature Bank, has prompted the reallocation of sizable amounts of assets from banks to money market funds.

Positioning the Money Market Funds

Portfolio composition is subject to change.

The Fed is almost certainly close to the end of its tightening campaign. The Funds continue to have short weighted average maturities to take advantage of higher rates, as markets price a high probability of at least one more hike this year. However, we have a small position in longer maturity bonds in the Government Securities Money Market Fund, and will likely extend more in both funds later this year to lock in higher yields.

Notable changes to the portfolio

In May, we began investing in repurchase agreements (repos) with the Federal Reserve Bank of New York in the U.S. Treasury Fund, as we have been doing for about a year in the Government Securities Money Market Fund. This added a highly creditworthy counterparty, offering very attractive yields.

Why should investors consider investing in this Fund?

We believe money market funds provide a very liquid, creditworthy, and currently high-yielding alternative to bank deposit products. This was demonstrated earlier this year as investors withdrew deposits from certain banks and reallocated massive amounts of funds to the money market sector.


An investor should consider a fund’s investment objectives, risks and charges and expenses carefully before investing or sending money This and other important information about an investment company can be found in the fund’s prospectus. To obtain a Cavanal Hill Funds prospectus or summary prospectus, please call 800-762-7085 or visit us at Please read it carefully before investing.

Cavanal Hill Investment Management, Inc. is an SEC registered investment adviser and a wholly-owned subsidiary of BOK Financial Corporation, a financial holding company (“BOKF”). BOKF, NA serves as the custodian for the Cavanal Hill Funds. Cavanal Hill Investment Management, Inc. provides investment advice, administration and other services for the Funds and receives a fee for providing such services as fully described in the prospectus. The Funds are distributed by Cavanal Hill Distributors, Inc. a registered Broker/Dealer, member FINRA and wholly-owned subsidiary of BOKF.

You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.

Commentary provided is for the indicated period and is designed to provide a frame of reference. It does not constitute investment advice. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. The opinions expressed herein reflect the judgment of the authors at this date and are subject to change without notice and are not a complete analysis of any sector, industry or security. This document contains forward-looking statements that are based on management’s beliefs, assumptions, current expectations, estimates and projections about the Cavanal Hill Funds, the securities and credit markets and the economy in general. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “plans,” “projects,” variations of such words and similar expressions are intended to identify such forward-looking statements. Management judgments relating to and discussion of the value and potential future value or performance of any security, group of securities, type of security or market segment involve judgments as to expected events are inherently forward-looking statements. Management judgments relating to and discussion of the value and potential future value or performance of any security, group of securities, type of security, group of securities, type of security or market segment involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what is expressed, implied, or forecasted in such forward-looking statements. The potential realization of these forward-looking statements is subject to a number of limitations and risks, which are described in the Fund’s prospectuses, and investors or potential investors, are cautioned to review the Funds’ prospectuses and the description of such risks. Neither the Funds nor the Funds’ investment adviser, Cavanal Hill, undertake any obligation to update, amend, or clarify forward-looking statement, whether as a result of new information, future events or otherwise.

Not FDIC Insured | No Guarantee | May Lose Value

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