The New York Times writes "Money Market Funds and C.D.s Show Signs of Life." The article explains, "Benign neglect has been a rational approach to managing cash since the financial crisis. It made little sense to apply any elbow grease searching for yields when options ranged from earning nothing to earning next to nothing. But with last month's rise in the Federal Reserve's target interest rate and the expectation that there could be three rate increases this year, money market mutual funds are showing signs of life. "We are heading to 1 percent yields, and the bleeding edge of cash could touch 2 percent in 2017," said Peter G. Crane, the publisher of Money Fund Intelligence. Modest, you say? Well, modest gains may be especially appealing given recent bond losses. In the fourth quarter, core bond funds, the go-to diversification tool for most investors, fell 3 percent, as rising yields pushed down bond prices. If you're inclined to seek out even more stability in a money market mutual fund now that yields are resuscitating, make sure you understand recent changes in the rules that govern how some funds operate." It adds, "Shareholders may find these fees and gates quite unappealing; the fund industry certainly does. It is afraid that the changes will scare off investors. That's why most fund companies and brokerages have switched their default money market fund for retail clients from a prime fund to a government fund. Government funds invest in extremely liquid government debt, adding safety and liquidity, and these funds don't have redemption fees or gates. But government money market funds have a downside: lower yields. The largest retail money market fund, now called Fidelity Government Cash Reserves (it was a prime money market fund known as Fidelity Cash Reserves until the company changed the fund's mandate), yielded just 0.13 percent in early January."
