Like many in 2003-2004, the Financial Times confuses the remote possibility of a money fund "breaking the buck" with the potential for negative yields due to sub-one percent yields in Treasury money market funds in its article, "Money market funds face new pressure". The FT evidently doesn't realize that money market prices (like bond prices) go up when yields go down. The piece says, "With short-dated Treasury yields falling to less than 1 per cent, there is increasingly little room for managers to manoeuvre. Further pressure on the razor-thin margin of yield means funds would come perilously close to offering no return at all, or even allowing investors' money to fall below its value." However, to correct FT, fund yields and NAVs are separate issues. There is a theoretical chance of a negative yield, where a fund would charge investors instead of paying. But we're still nowhere near the lows of 2003-4 (when no fund yields went negative), and the NAV would still be $1.00. So no funds would "break the buck".

Email This Article




Use a comma or a semicolon to separate

captcha image

Daily Link Archive

2024 2023 2022
March December December
February November November
January October October
September September
August August
July July
June June
May May
April April
March March
February February
January January
2021 2020 2019
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2018 2017 2016
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2015 2014 2013
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2012 2011 2010
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2009 2008 2007
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2006
December
November
October
September