Hear Pete Crane on WSJ's Podcast
Hear Pete Crane on The Wall Street Journal's Podcast which accompanied yesterday's article, "When Safe Places No Longer Feel So Safe". Crane tells the WSJ, "There are really a few things you can do [to make sure your money fund is safe]. The most important thing is to know where the Fed is, to know where the Federal funds target rate is. It's currently zero to 0.25%. Make sure that your yield that you're getting on the money fund is not too far removed. In normal conditions, a one percent range around the Federal funds target ... would be appropriate. Currently, you go up to perhaps as much as 2%, but anything over 2% in the current environment is too good to be true. The other thing you can do is go with the name and the brand.... Even though money market funds can 'break the buck' as we learned so painfully, it's more likely that you'll get reparations or be made whole if you go with a large, reputable firm.... It's not always the case, but investors should assume that return equals risk, that there's no free lunches."
