Yesterday's Boston Globe wrote "Pain that won't yield", which said, "Money market mutual funds are supposed to be the no-brainer of the investment world. But the basic money market proposition -- a safe place to park cash with ready access, in return for modest yields -- is under stress as never before. Now, money funds have to answer real questions about safety and slash fees, because interest rates are appallingly low. Investors and the firms managing $3.6 trillion in money market assets are both feeling the strain.... Ultralow money market yields are a product of a Federal Reserve committed to very low short-term interest rates and the investment world's flight to safety, which has eased some since last year but remains a powerful force in the market for the most solid short-term securities. All money fund assets amounted to $3.6 trillion as of last week, according to the Investment Company Institute, an industry group. That's down from a peak of $3.9 trillion, achieved while the stock market plunged in April. But it's still up about $1 trillion from its level of two years ago, says Peter Crane of Crane Data LLC, a research firm in Westborough." Crane tells the Globe, "I don't think anyone is depressed about that scenario. You have a lot more issues and challenges, but in the mutual fund business it's all about the assets." Finally, the article says, "Retail money market assets have fallen about 14 percent since their peak earlier this year, the ICI reports. Where did the money go? Short-term bond funds, one step further out in both risk and reward, have been big winners. Many banks are paying for money market business, offering more than competitive yields of up to 1 percent for larger amounts. For now, and the foreseeable future, the no-brainer of the investment world is a much more complicated proposition."
