Letter corrects FT, "Only one money market fund 'broke the buck'". Professor George Pennacchi, from the University of Illinois, Champaign, writes the FT, "Sir, The front page article 'Sceptical investors race to safety of US money market funds' (December 30) contains the misleading statement, "The funds are attractive because they rarely lose money, although a number 'broke the buck' and incurred losses during the financial crisis". The number of money market funds that broke the buck during the financial crisis is exactly one, namely, the Reserve Primary Fund during the week the Lehman Brothers declared bankruptcy. The Reserve Primary Fund held $785m in Lehman commercial paper. Investors in this fund ultimately recovered slightly more than 99 per cent of what was the fund's reported assets prior to its writedown. In October 2008 the US Treasury offered insurance to money market funds for an insurance premium of 1 to 1.5 basis points under the Temporary Guarantee Program for Money Market Funds. The programme ended after one year with no claims being paid. No US money market fund has since broken the buck."
