The Sunday LA Times writes "Look, Ma, nearly no yield", which is subtitled, "Assets pour out of money market funds, Vanguard comes out ahead and other highlights of 2009." The Tom Petruno article says, "The plug got pulled on money market mutual funds in 2009. Total assets of money funds plummeted by nearly $500 billion, to about $3.26 trillion at the end of the year, a drop of 13% from the end of 2008, according to IMoneyNet Inc. The cash poured out because the Federal Reserve's policy of near-zero short-term interest rates also reduced money fund payouts to nearly zero.... What's more, investors know that money fund yields have little chance of moving higher until the Fed begins to lift its benchmark interest rate -- an event unlikely to happen until the second half of the year.... But the surprise may be how much cash has stayed in money funds. About 70% of money fund assets belong to institutional investors, and for many of them there may be no decent alternative to the immediate liquidity that money funds provide, even if interest earnings are zilch, said Pete Crane, head of money fund research firm Crane Data. Many risk-averse small investors, too, may be opting to wait out the rate drought in the funds, Crane figures, given paltry yields on other short-term accounts." Crane says, "My general rule is, if you're not going to make $100 more [in interest] by switching, don't bother." See also, The Boston Herald's Chuck Jaffe Q&A, "Money fund yields so low that banks are better idea".
