As we head into 2026, money market funds (MMFs) find themselves in a position few would have predicted just a few years ago. After more than a decade defined by near-zero or negative interest rates, MMFs have returned to the centre of institutional cash management – and they have done so with remarkable resilience. Even as rates have begun to decline, assets have continued to grow, innovation has accelerated, and the strategic importance of MMFs has arguably never been greater.
This outlook explores the forces shaping money markets in 2026: the evolving rate environment, record asset levels, the rise of tokenised distribution, intensifying competition through portals, growing demands for real-time connectivity, structural challenges around transfer agency, and the emerging role of artificial intelligence. Taken together, these trends point to a market at an inflection point, moving from recovery to reinvention.
Rates may be falling, but money is still flowing
The starting point for any 2026 outlook is interest rates. In December 2025, the US Federal Reserve delivered its latest rate cut, reinforcing expectations that the peak of the tightening cycle is behind us. Similar dynamics are playing out in the UK, where rates have also begun to ease as inflation moderates and growth concerns persist.
Historically, rate cuts would have been expected to trigger an exodus from money market funds. That simply has not happened this time. Instead, MMFs have defied precedent. Despite declining yields, institutional money market assets are sitting at or near all-time highs – roughly $8 trillion globally – making this the largest pool of institutional MMF assets ever recorded.
The reason is simple: yield is no longer the sole, or even primary, driver. Over the past two years, investors have been reminded of the enduring value of security, liquidity and operational certainty. MMFs have proven themselves as a strategic allocation, not just a tactical one, offering daily liquidity, transparency and capital preservation in an increasingly volatile macro and geopolitical environment.
Looking into 2026, even if rates continue to drift lower, there is little evidence to suggest a sharp reversal of flows. On the contrary, MMFs have become embedded in treasury strategies in a way that is likely to endure.
Tokenisation moves from concept to catalyst
If rates explain why money has stayed in MMFs, tokenisation helps explain why the market is still expanding.
Over the past two years, tokenisation has moved rapidly from proof-of-concept to live commercial deployment, with money market funds emerging as one of the most natural and compelling use cases. Tokenised distribution – where traditional MMFs are made available on blockchain rails – is now reshaping how investors access, use and think about liquidity products.
Recent Calastone research shows that MMFs are among the most favoured asset classes for tokenised distribution, alongside private assets. This is being driven by clear demand from digital-native investors, particularly in the DeFi ecosystem, who are looking for low-risk, yield-bearing instruments that can operate seamlessly on-chain. For these investors, tokenised MMFs function as a true form of digital cash, combining the stability of traditional funds with the programmability, transparency and 24/7 settlement of blockchain infrastructure.
Beyond distribution, tokenisation unlocks an even more powerful second-order effect: collateral mobility. Tokenised MMF units can be transferred and pledged intraday, enabling real-time collateral management, more precise margining, and a reduction in systemic risk during periods of market stress. Live market initiatives using tokenised MMFs as collateral are already demonstrating what is possible.
In 2026, tokenisation will no longer be a differentiator for early adopters alone. It will increasingly be viewed as a strategic capability, one that expands addressable markets, improves operational efficiency, and fundamentally enhances the utility of money market funds.
Portals become the battleground for distribution
As MMFs grow in importance, competition is intensifying and nowhere is this more evident than in distribution.
The money market portal has become a critical control point in the value chain. In 2025 alone, the market saw a wave of new portal launches and upgrades, alongside renewed investment from both established players and new entrants. Banks, asset managers, fintechs and independent platforms are all vying to own the client interface.
This shift reflects a broader realisation: access matters as much as product. With yields tightly clustered and fees already compressed, differentiation increasingly comes down to experience, workflow integration and data transparency. Portals that embed themselves into daily treasury operations – integrating trading, settlement, reporting and cash positioning – are becoming ‘sticky’ infrastructure rather than optional tools.
For asset managers, portals offer more than distribution reach. They provide a way to retain client relationships even as assets move between funds, capture incremental revenue, and gain richer insights into investor behaviour. For banks and intermediaries, they represent an opportunity to move up the value chain by owning the access point rather than simply processing trades.
As we move into 2026, expect continued investment, consolidation and innovation in this space.
Real-time connectivity is no longer optional
The rapid growth of MMFs is placing increasing strain on legacy infrastructure. Batch-based processes, manual touchpoints and end-of-day reporting are increasingly out of step with client expectations.
Institutional investors now expect straight-through processing, real-time trade execution, instant confirmations and continuous visibility of positions and liquidity. This is especially critical for money market funds, where T+0 settlement, intraday liquidity and rapid flows are defining characteristics.
API-driven connectivity is therefore becoming foundational. Real-time integration between portals, fund managers, transfer agents and treasury management systems allows MMFs to operate at the speed investors now demand. It also enables greater transparency, better risk management and more efficient use of liquidity – all essential as assets continue to scale.
This is not new thinking, but it is newly urgent. As MMFs grow at a record pace, infrastructure that cannot operate in real time will increasingly become a bottleneck.
Transfer agency: an emerging pressure point
One of the less visible, but increasingly important, challenges in the MMF ecosystem is transfer agency.
Many institutional investors are finding that their existing TA arrangements are not well suited to the unique characteristics of money market funds. MMFs are not long-term, buy-and-hold products; they are operational liquidity tools, with high transaction volumes, frequent intraday movements and a premium on speed and accuracy.
As a result, clients are becoming more vocal about service limitations – from delayed reporting to inflexible cut-offs and a lack of understanding around T+0 dynamics. In 2026, asset managers and distributors will need to think carefully about how TA services evolve to support the specific demands of money markets, rather than treating them as just another fund type.
AI enters the money market ecosystem
Like every other corner of financial services, money markets are beginning to feel the impact of artificial intelligence.
In the near term, AI’s influence is likely to be most pronounced in operational and analytical use cases: forecasting cash flows, optimising liquidity buffers, detecting anomalies, and enhancing client service through smarter automation. Over time, more advanced applications, from predictive stress testing to dynamic portfolio optimisation, will emerge.
Importantly, AI will not replace the core principles of money market investing. But it will augment decision-making, improve efficiency and help firms manage scale and complexity more effectively. In a market where margins are thin and volumes are high, those gains matter.
A positive note on industry momentum
Finally, it would be remiss not to acknowledge the continued investment across the industry. The acquisition of Calastone by SS&C is a positive signal – reinforcing long-term confidence in funds infrastructure, and accelerating investment in the technology required to support the next phase of growth in money markets.
Looking ahead
As we enter 2026, money market funds are no longeder simply beneficiaries of a high-rate environment. They are evolving into a more flexible, more digital and more strategically important part of the global financial system.
Rates may fluctuate, but the structural drivers – tokenisation, real-time connectivity, modern distribution and smarter infrastructure – are here to stay. For asset managers, intermediaries and investors alike, the challenge now is how quickly they can adapt.
The future of money markets is already taking shape. In 2026, it will accelerate.
