"Tiny yields challenge money funds, investors" writes AP. The article says, "Three months after the government stepped in to prop up reeling money-market funds, the $3.8 trillion industry is largely healthy again, with money flowing back to the safe-harbor investments at a steady clip. But there's one problem: Yields for the safest category of money funds, those that invest in Treasury bills, have sunk to near zero." AP quotes Peter Crane of Crane Data, publisher of the newsletter Money Fund Intelligence, "If Treasury funds yielding zero is your biggest problem in these markets, congratulations." It adds, "Crane, of Crane Data, said even if some of those funds aren't able to maintain yields big enough to offset expenses, they'll have enough financial cushion to ride things out until yields rebound." Crane says, "This is a gradual problem that fund companies will have plenty of time to deal with.... You might see a new account fee, or higher wire transfer fees," comparing the "`situation to banks that begin offering free checking accounts but raise fees for other services such as covering bounced checks." See also, Fund Action's "Assets Likely To Rise Despite Challenges", which says, "Money market fund assets are likely to increase during 2009 in spite of unprecedented low interest rates, possible sweeping regulatory changes and increased costs from maintenance of government insurance. These challenges may also drive some players out of the business. Peter Crane, ceo of Crane Data, believes that investor flight to safety will ease in 2009, but so long as the overall economy remains uncertain, institutions will want to increase their cash holdings. 'Cash is the only true safe harbor, and money funds remain the best way to access that,' he said, particularly for large institutions."
