Core Insights - Yields on the $7 trillion in money market funds are expected to decrease as the Federal Reserve is anticipated to cut its benchmark interest rate soon [1][2] - Advisors are rethinking strategies due to the potential for reinvestment risk as fixed-income markets are pricing in a Federal Funds rate that is a full percentage point lower than the current range of 4.25% to 4.50% [2][3] - High-quality fixed-income yields are historically attractive, with current yields close to 4.5%, placing them in the 70th percentile historically [5] Investment Strategies - Advisors are discussing various fixed-income options with clients, including certificates of deposit and corporate bonds [4] - Some advisors are waiting for the first Fed rate cut before making new investment positions, indicating caution due to previous market miscalculations regarding rate cuts [6] - Conservative investment strategies include building CD ladders and focusing on high-quality, short to intermediate duration bonds [6][7] Market Conditions - The effective Fed Funds rate is currently at 4.33%, and once cuts begin, they are expected to quickly impact short-term rates [3] - Advisors are utilizing ETFs for liquidity and to manage credit risks, focusing on high-quality options such as Vanguard Short-Term Treasury Index ETF and Vanguard Intermediate Corporate Bond Index ETF [7]

Group 1 - Low-cost ETFs require revenue generation to cover costs, leading to regular ETF closures due to insufficient assets [1] - A significant percentage of ETFs are at risk of closure, but investors typically do not lose their investments upon closure [1][2] - For each high-closure-risk ETF, there are usually larger, more viable alternatives available [2] Group 2 - Upon the decision to delist or liquidate an ETF, a prospectus supplement will announce the last trading date and liquidation date [3] - The fund will halt creations and prepare to convert to cash, causing performance divergence from the underlying index [3][4] - Indicative net asset value (iNAV) will continue to be published, and it is advisable to sell shares before the last trading day [4] Group 3 - Liquidation typically results in cash distributions equal to NAV, making it less cumbersome than delisting [5] - If an ETF delists without liquidating, investors must trade over the counter, which is generally more complicated and costly [6] Group 4 - ETF closures can lead to reputation risk for advisors, as recommending a fund that closes can result in difficult conversations with clients [7] - Reinvestment risk arises when an ETF delists or liquidates, requiring investors to find new investment opportunities for their cash-equivalent NAV [7]