In the midst of an almost full-blown money fund meltown, The Wall Street Journal reports some hopeful news, saying, "Investors pulled more cash out of money-market funds, prompting a second large fund to close to investors, amid concern that these onetime safe harbors are now too risky. In an effort to stem such withdrawals, the U.S. government Thursday night was working toward taking the unprecedented step of covering money-market funds with a variation of the federal deposit insurance provided to banks."
Money markets imploded after Reserve Primary Fund "broke the buck" on Tuesday, dropping to $0.97 a share. The company has since said it is no longer offering ANY of its funds for sale, and has implemented an up to 7 day delay in redemptions on all Reserve funds. Reserve's overall assets have plummeted from $84 billion as of Aug. 31 to $22 billion as of Wednesday. Note that Reserve International Liquidity Fund and Reserve Yield Plus also "broke the buck", but we don't count these officially since the former is a non-SEC regulated "offshore" fund and the latter is an "enhanced cash" or ultra-short bond fund. Neither is a true "money market fund". (Some reports have also erroneously labeled Colorado Diversified Trust, or COLOTRUST, a money fund; it is a local government investment pool, run by MBIA, and is not regulated by the SEC.)
In other news, see the New York Times article, "Money Market Funds Enter a World of Risk", which contains a list of links at the bottom to various fund companies statements. Statements include: Blackrock, Columbia Management, Dreyfus, Evergreen Investments, Federated Investors, Franklin Templeton, Invesco, Legg Mason, Morgan Stanley, Oppenheimer Funds, Pimco, RidgeWorth, Schwab, State Street, T. Rowe Price, Vanguard.
Finally, the Investment Company Institute's weekly money fund asset series showed a record $169.03 billion decrease to $3.413 trillon in the week ended Sept. 17. (Numbers include the $60-plus billion drop in Reserve assets.) Retail money fund assets actually increased by $4.28 billion to $1.24 trillion, while Institional assets plunged $173.3 billion to $2.17 trillion. Note that we'll be updating the daily asset flows from Thursday once our Money Fund Intelligence Daily is published around 9:30 a.m. Friday. Initial indications are that outflows slowed yesterday, but check back for the official numbers.
