Fund columnist Allan Sloan writes on the benefits of rising rates and Tax Exempt money funds in The Washington Post in piece entitled, "Here's one way the Fed's rate increase gives savers a boost." He says, "Don't look now, but the Federal Reserve has actually done something that will benefit the savers among us. To wit, money market mutual fund yields are going to rise a bit, thanks to the rate increase the Fed announced Wednesday. And here's a thought that might help make a small break for savers a bit bigger: If you've got a serious amount invested in regular money market funds -- I'll leave the definition of "serious" to you, because everyone's situation is different -- you might want to look at municipal money market funds, whose dividends are mostly or entirely tax-free." The article continues, "Why mention muni money funds? Because while both regular and muni money funds will soon benefit from the Fed rate increase that everyone knows about, muni fund yields have been quietly benefitting from something far less well known: Securities and Exchange Commission regulations that went into effect in October. Those regulations have driven many big institutional investors out of muni money funds, and have also driven out retail investors whose brokerage firms changed their “sweep accounts” to government funds from muni funds." The Post adds, "Assets in institutional muni funds have fallen more than 90 percent this year, to $4.6 billion as of Nov. 30 from $52 billion at year-end 2015, according to the Money Fund Intelligence newsletter. Peter Crane, who publishes the newsletter, said new rules require institutional muni funds to price shares to four digits rather than at the customary $1 a share, and institutions don't want to have to deal with that. Crane says that total muni money fund assets have fallen almost 50 percent this year -- to $130 billion as of Nov. 30 from $252 billion."
