Baltimore Sun on Ultra-Shorts
The Baltimore Sun writes "T. Rowe Price, Legg Mason offering up ultrashort-term bond funds". The article, subtitled, "Funds are seen as an alternative to money market funds," says, "Baltimore's two major mutual fund companies have joined a small but growing number of investment firms offering ultrashort-term bond funds, which may become an alternative to the traditional money market fund. The T. Rowe Price Ultra Short-Term Bond Fund launched in December and has $175 million in assets. Legg Mason Inc.'s California subsidiary this month filed to register the Western Asset Ultra Short Obligations Fund with regulators. There are now close to 50 ultrashort bond funds, with seven of them introduced last year, according to Morningstar Inc., which tracks funds.... Some fund experts say companies are offering ultrashort-term bond funds as an alternative for risk-averse investors fed up with the low rates offered by money market funds. But others say companies also are gearing up for possible regulatory reforms that could make money market funds less attractive.... Joseph Lynagh, manager of the new Price Ultra Short-Term Bond Fund, said the money manager introduced the fund in response to current low interest rates, not potential changes in money market funds." "Regulatory reform is going to happen in some way, shape or form, and we can't predict what that will be or when that will be," he said. "Here is a product we felt filled a gap in our product line up." The piece adds, "Lynagh said the ultrashort bond fund fits between a money market that now pays an annual yield of 0.01 percent and a short-term bond fund at 1.63 percent. It's geared for investors who want a place to park cash that they won't need immediately, he said. The annual yield on the fund is currently 0.3 percent. It invests in corporate and government securities with an average maturity of no more than 1.5 years. Though the share price can fluctuate, it has remained at $5 since the fund's launch in December."
