The ‘super surge’ of money market funds is on with yields over 4.6% luring savers. Here’s what you need to know.

‘This is far from normal’: Bank failures have triggered a cash stampede into money funds, but there are complex trade-offs to consider.

Last month’s bank failures, combined with a healthy yield advantage over bank deposit accounts, has prompted a “super surge” of assets into money market mutual funds, according to research firm Crane Data.

The 100 largest taxable money funds tracked by Crane yield more than 4.6% on average, while the average rate on savings accounts nationwide is 0.37%, according to DepositAccounts.com, a unit of LendingTree. For savers looking to reap the rewards of the Federal Reserve’s recent interest-rate increases, money market funds have some clear advantages. A recent report from the Federal Reserve Bank of New York illustrates the point. Since March of last year, money fund yields have climbed 4.13 percentage points, or 97% of the increase in the effective federal-funds rate over that period, while the average rate on banks’ three-month certificates of deposit offered to retail customers climbed just 0.

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