Cavanal Hill Money Market Funds Quarterly Commentary
Market Overview
Softening U.S. Consumer Price Index (CPI) and labor data led investors to believe the Federal Reserve (the Fed) would begin cutting rates in July. However, the Fed left its policy rate unchanged. Yields moved lower despite the Fed not cutting rates in July by nearly 75 basis points (0.75%) during the quarter. In August, the spread between the two-year and 10-year Treasury notes turned positive, albeit briefly, for the first time in over two years, ending the longest inversion in more than 40 years. Later in the month, Federal Reserve Chair Jerome Powell sent a clear signal that rate cuts were imminent when speaking at the annual economic policy symposium in Jackson Hole, Wyoming. The Federal Open Market Committee finally cut the federal funds rate by 50 basis points (0.50%), to a range of between 4.75% to 5.00%, in September, with expectations for more cuts later in 2024 and 2025.
Positioning the Fund
Portfolio composition is subject to change
We focused on acquiring current coupon fixed rate securities to extend duration. The window was limited as markets tend to move swiftly with exaggerated expectations. One-month bills currently yield more than one-year bills, discouraging money markets from extending too far in this environment.
Notable portfolio changes
Weighted average maturity of the funds extended by seven days but will likely shorten in the coming quarter.
Why should investors consider investing in this fund?
Though it may seem a surprise, money fund assets typically continue to increase long after the Fed begins easing. This is due to money funds offering higher rates from investing in diversified holdings. Cavanal Hill Money Market Funds focuses on safety of principal, in liquid assets, and competitive yield.
(2024). Money Fund Intelligence [Review of Money Fund Intelligence]. Crane Data, 19(1).
(2024). Money Fund Intelligence [Review of Money Fund Intelligence]. Crane Data, 19(1).
Disclosures
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 www.cavanalhillfunds.com. 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.
If you’d like additional information about this or any of the Cavanal Hill Funds, please contact Bill King at 855.359.1898, Bill.King@cavanalhill.com, or cavanalhillfunds.com.
Not FDIC Insured | May Lose Value | No Bank Guarantee