Investment News writes "Investors yank cash from money market funds", which says, "Wary investors have been steadily moving assets out of safe -- but incredibly low-yielding -- money market mutual funds in significant numbers since the U.S. markets bounced off of their lows in early March. More than $200 billion has been pulled from money market funds since March 11 -- just two days after the Standard & Poor's 500 stock index started its nearly 40% ascent through June 8 -- according to data from the Investment Company Institute in Washington."
The article continues, "At the same time, the flight from money market funds is also being fueled by individuals who are simply looking for higher yields on their cash and short-term investments, noted Peter Crane, president of Crane Data LLC, a Westborough. Mass., money fund consultant."
Investment News quotes Crane, "It's always difficult to measure where exactly the assets are going when they move out of money market funds. But with yields on basically all of these funds only slightly above zero, there's one place they are definitely going: Anywhere but money market funds."
The article says, "The typical money market fund tracked in the Crane Money Fund Index was yielding 0.29% at the start of last week. As a result, advisers are now looking at a number of other options to boost their clients' returns on short-term holdings."
It adds, "Short-term-bond funds, for one, appear to be an increasingly popular parking spot: These funds experienced roughly $2.7 billion in net inflows in the month of April alone, according to data from FRC, and more than $9 billion in total assets year-to-date. By comparison, short-term-bond funds recorded just $2.4 billion in net flows for all of 2008.... Other advisers say that they've been counseling clients to move out of money market funds and into more standard banking accounts. Traditional savings accounts, for one, are yielding more at the moment than most money market funds."
