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more links »Nightly Bus. Report: "Money Market Mutual Funds May Have To Manage More Scrutiny"
PBS's Nightly Business Report did a piece entitled, "Money Market Mutual Funds May Have To Manage More Scrutiny" last night, which rehashes some old news on money fund bailouts and which speculates that money funds mace face more regulatory scrutiny. The Reserve's Bruce Bent, DB Advisors Kevin Bannerton, and fund gadfly Mercer Bullard briefly comment in the segment. "During the past year, at least 17 money market management firms have quietly unwound their riskier investments to prevent what's known as breaking the buck," says NBR. (We argue, though, that this is incorrect. Most would not have "broken the buck" even without support actions.)
"Money market mutual funds are safe, but not perfect" says USA Today
USA Today writes "Money market mutual funds are safe, but not perfect" in reader Q&A. The question was: "Can you verify that no one in the U.S. has ever lost money in a money market mutual fund?" Columnist Matt Krantz responds, "Money market mutual funds are extremely safe places to park cash. Next to putting your money in an FDIC-insured bank account, a money market fund run by a respected financial firm is one of the safest things you can do with your cash." He adds, "Just one money market fund allowed its shares to fall below $1, and that was Community Bankers US Government Fund in 1994." In other news, Reserve issued a press release yesterday afternoon entitled, "The Reserve Mourns and Remembers Former Partner, Henry "Harry" B.R. Brown."
"Smaller Money Funds Throw in the Towel"
Last Friday, Fund Action wrote "Smaller Money Funds Throw in the Towel", which said, "As new regulation looms and firms assess damage from the credit crunch, the money market fund industry is consolidating." We disagree with this contention, however, as Fund Action is only able to cite a handful on marginal players leaving the space, such as Pax World Funds and Capital One (moving to Fidelity). There hasn't been a substantial departure from the money fund space since Alliance sold its fund management to Federated many years ago.