Investors are resorting to so-called cash funds for higher yields, as strict investment regulations are bringing down returns in the money fund industry.
The annual returns of the $2.6 trillion money fund industry has dwindled to an average of 0.04 percent.
Risk averse investors are resorting to these alternative funds which are positioned as low risk investment but can generate higher returns.
Financial observers noted that the growth of "cash funds" is another symptom that the Federal Reserve's monetary policy has encouraged another credit boom which in the long could have adverse effects on borrowers, lenders and investors.
According to data by Lipper, assets in these funds that have average weighted maturities up to a year, have grown to $48 billion as of February 2013, from $36.4 billion at the end of 2011.
Observers say that the resort to cash funds by conservative investors is an indication that they are desperate for returns after four years of rock-bottom rates with no sign that the Fed plans to scale back the central bank's very low interest rate policy.
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