Sunday's Financial Times writes "Money funds remain key despite the exodus". The article says, "As investor confidence came back in the spring of 2009, money market funds posted enormous outflows. It was not as devastating for the industry as it could have been because the previous year and even 2007 saw huge inflows courtesy of the worst financial crisis in decades. Yet stubbornly low yields and a less frightening stock market have resulted in a continued investor exodus from money markets. In spite of the outflows, money market funds remain important to investors, particularly institutions that have set allocations to cash and liabilities that need to be paid promptly.... The outflows themselves have come primarily from American retail investors, while institutions, especially those in Europe, have largely maintained their cash holdings." It quotes JPMorgan's Kathleen Hughes, "Investors with high allocations to cash, such as hedge funds, retail investors and private groups, have rotated into risk. However, the true institutional investor doesn't have a lot of options. They have to hold cash." FT also quotes State Street Global Advisors' Steve Meier, "We've all learned painful lessons. There's no free lunch out there. When liquidity dries up, it dries up for everyone." See also, Palm Beach Daily News' "Bank deposit or money market fund? Investors' liquidity dilemma continues".
