Rep. Michael McCaul Is Parking More Cash

Congressman Michael McCaul, one of the most influential Representatives in the House, disclosed his recent stock market trading moves.

Rep. McCaul’s biggest trade in February was investing in the Vanguard Federal Money Market Fund (VMFXX:US), which invests in short term, high quality money market securities issued by US government agencies.

Traditionally, money market funds are used to park cash amid the wider market volatility. Investors seek to hide and preserve their capital in times of market turmoil. 

"(There are) so many potential catalysts for a systemic deleveraging event that sparks policy panic/end of Fed tightening; ... and investors must be ready at that moment to deploy cash in new leadership assets which outperform in era of higher inflation," BofA analysts said.

According to a recent report, money market funds attracted $300 billion in just four weeks as investors seek shelter from the ongoing global banking crisis. Bank of America (BAC:US) analysts estimate that assets under managements (AUM) have now exceeded $5 trillion. 

The bank’s analysts warned clients that the prior 2 times when market money funds attracted large inflows were 2008 and 2020. What followed is the FED cutting rates in response to the global financial crisis (GFC) and the Covid-19 pandemic, respectively.

A recent survey conducted by Investopedia showed that money market funds are growing in popularity with 30% of respondents saying they are favoring those over individual company stocks.

Rep. McCaul started investing in VMFXX in late January. The Congressman disclosed four investments valued between $500,000 and $1 million so far in 2023, in addition to several smaller ones.