VUG - VUG: The Explosive Potential Hidden In Money Market Funds

2024-04-15 07:20:53 ET

Summary

• The article discusses the potential for continued momentum in growth stocks and why VUG is an excellent low cost choice for that exposure.
• There is currently $6 trillion still sitting in U.S. money market funds as the Federal Reserve is expected to start cutting rates later this year.
• Investors may seek higher yields in a lower interest-rate environment, which could contribute to the continued rise in tech and growth stocks.
• My go to chart below shows the percentage of U.S. money market funds as a proportion of the S&P 500 Market Cap.

Summary

Many investors may feel cautious in this current market environment with U.S. equity indexes near all-time highs. Although sticky inflation (see the latest CPI report) , increasing geopolitical tensions, and slowing economic growth pose considerable risk to equity markets, I believe there is still 1 big elephant in the room that could propel gains further. There is currently $6 trillion still sitting in U.S. money market funds as the Federal Reserve is expected to start cutting rates later this year. While the momentum factor has already been one of the biggest drivers of 2024, it's possible this trend could continue. ...

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