Daily Links Archives: August, 2009

"Fidelity shines in slow lane" writes the Sunday Boston Globe. The article, subtitled "Firm's money market funds capitalize on investor worries and rivals' missteps to take the lead," says, "Some of Fidelity Investments' fastest growing mutual funds aren't managed in Boston's financial district, but rather in an airy trading room in an unassuming office park an hour away. This is where Fidelity runs its mammoth money market mutual funds business, which after years of being a quiet source of strength and profits for the investment company, emerged as a star during the financial crisis of the past year. In that time, Fidelity's money market mutual funds managed to avoid losses that felled other substantial competitors and gained an even more dominant share of the market while accounting for a sizable portion of the company's overall growth. And during a recent period when yields in many money market funds have hovered near zero, some of Fidelity's most prominent funds have paid significantly higher rates. Sometimes relegated to the backwater of the mutual fund industry, the money market business at Fidelity is accorded prominent status." The Globe quotes Charles S. Morrison II, president of the company's Money Market Group, "This is a franchise business for Fidelity." The piece also quotes Peter Crane, president of Crane Data, "Fidelity had zero loss events in protecting their shareholders. It's just astounding. Fidelity has been both good and lucky in the last couple years." It adds, "Fidelity executives bristle at the idea luck had anything to do with the company's success. It is a result of the company's investment in the business -- with nearly 70 researchers devoted to money market funds -- and the skill of those people."

We've never heard of this event or company before, but we're heard this new conference mentioned by a couple of commercial paper dealers and issuers (so we wanted to mention). iiBIG LLC's 2009 Commercial Paper Executive Summit will be held September 16-17 in New York at the Westin Times Square. (Alas, Crane Data won't be able to make it due to our participation in the Schwab IMPACT conference in San Diego.) Like with our recent Crane's Money Fund Symposium in Providence, their timing is excellent. Topics on the agenda include: State of the Commercial Paper Industry - What does the Future Hold? with Randy Harrison from Citigroup Global Markets and Frank Sansone from Dexia; "New Considerations Affecting the Investor Demand for CP," with Alison Emmerich from Dreyfus; "Straight-A Funding, LLC;" and a "Trader's Panel Discussion" with Christopher Conetta of Barclays Capital. The pricing for the day-and-a-half event is $1,895 with discounts available for investors. Note that members of the Commercial Paper Issuer's Working Group (www.cpiwg.org) will also be holding its semiannual meeting in New York on September 24 at the offices of JPMorgan.

CNBC's Kudlow on Regulating Money Funds discusses Paul Volcker's recent comments to Bloomberg with Tony Carfang of Treasury Strategies' and Peter Morici of the University Of Maryland. In other news, Fitch Ratings released a statement on, "Straight-A Funding Holdings in Rated Money Market Funds," which says, "Rated money market funds investing in student loan short-term (SLST) notes issued by Straight-A Funding, LLC (rated 'F1+' by Fitch) have sought feedback on how such ABCP holdings are viewed in terms of Fitch ratings criteria, particularly with respect to concentration limits. Fitch's rating criteria for 'AAA/V1+' money market funds outlines minimum asset credit quality guidelines of 'A/F1', with 5% per issuer limit applicable to all issuers with the exception of U.S Treasury and government agency securities. Straight-A Funding is, however, in Fitch's view a unique instance of a government supported asset-backed commercial paper (ABCP) vehicle. The notes benefit from a fully-supported liquidity facility provided by the Federal Financing Bank (FFB), the credit risk of which is considered by Fitch to be commensurate with that of the U.S. government. As a result, a higher concentration than 5% would be appropriate in Fitch's view, reflecting low credit risk and high quality liquidity support."

We were happy to get mentions of this week's inaugural Crane's Money Fund Symposium in several publications and stories. ignites.com, which has password-protected content, ran "Money Fund Execs Disparage Liquidity Reforms" on Monday and "SEC, White House Mull Money Fund Liquidity Plan" on Tuesday. The latter story said, "The President's Working Group on Financial Markets and the Securities and Exchange Commission are considering creating a 'private liquidity bank' for money market funds that would be paid for by funds. The idea stems from concern that the SEC's proposed liquidity thresholds for money funds are inadequate to sustain redemptions of the type that occurred last September after the Reserve Primary Fund broke the buck, said Robert Plaze, assistant director of the agency's Division of Investment Management.... A liquidity facility would be created to avoid the need for the federal government to intervene, as it did last September with a Treasury guarantee for money funds and other programs, he added. Plaze, who is co-chair of the President's Working Group's committee on money funds, made his comments during a session of Crane Data's Money Fund Symposium. Plaze said there is 'quite a degree of connectivity' between the agency and the President's Working Group. He also said the President's Working Group sees the SEC's proposed money fund rules as a 'critical component' of the government's response to the traumatic market events of 2008." Yesterday, Investment News writes "Money market funds may suffer when federal backstops expire, J. P. Morgan exec fears," which says, "Money market mutual funds would benefit from a federal program to guard against the risk of illiquidity in the markets, analysts yesterday at the first Money Fund Symposium in Providence, R.I." Finally, see Reuters' "Judge combines Reserve Primary Fund lawsuits".

Late today, The Reserve issued a press release entitled "The Primary Fund: A Statement Regarding Calculations of Potential Distributions on a Pro Rata Basis", we learned from Bloomberg.com ("Reserve Fund Investors May Get Up to 99 Cents a Share"). Reserve's statement says, "The Fund and its Independent Trustees unequivocally support the distribution of the Fund's remaining assets on a fair and equitable basis as quickly as possible and on Friday filed briefs with the U.S. District Court for the Southern District of New York stating that position. In those briefs, we explained that, based on revised calculations and updated data, each unpaid shareholder may receive $0.9875 per share, pro rata, and possibly up to $0.99 per share, based on certain assumptions. We previously estimated that investors would receive $0.985 per share. To date, the Primary Fund has distributed $46.08 billion through four interim distributions on a pro rata basis to remaining shareholders, representing $.90 per share for each of the remaining 51.18 billion shares outstanding. The Fund holds $4.55 billion of remaining assets (not counting any value for its $785 million face amount of Lehman Brothers Holdings securities). The Board has set aside $3.5 billion of those assets in a special reserve to satisfy possible legal, accounting and other expenses.... [T]he special reserve could be substantially reduced, possibly to around $90 million, if the court were to approve a Proposed Plan of Distribution suggested by the Securities and Exchange Commission. Based on this assumption and assuming that the Fund would be unable to recover any value for its Lehman position, remaining investors would be paid $.9875 per share, pro rata. Shareholders could possibly receive up to $0.99 per share, pro rata, should the Fund receive 17% of par value for its Lehman securities, a figure that may reflect the current market value of the position.... [T]he Board is hopeful that through the SEC's proposed distribution plan or through other resolution of the litigation, the Fund can release more to investors more quickly. As previously stated, 'the sooner the litigation is resolved, the sooner moneys held in the special reserve can be released to shareholders and, potentially, the greater the payout.'"

Investment News writes "Money fund assets 'bleed out' as low interest rates persist, managers say". The article says, "The continued zero interest rate environment may be presenting a bigger challenge to money market mutual fund managers than rule changes proposed by the Securities and Exchange Commission, several managers told participants today at the Money Fund Symposium in Providence, R.I." It quotes Deborah Cunningham, chief investment officer for the Pittsburgh-based Federated Investors Inc., "If all of the [SEC] proposals come to fruition, the industry continues.... Investors may lose out on a couple of basis points of yield. But it would not cause major issues." The article continues, "Under the proposed SEC rules, money funds would be prohibited from purchasing illiquid securities and anything less than the highest-quality securities. Additionally, they would be required to hold a certain percentage of assets in cash or Treasury securities so they could be converted to cash easily.... The current low interest rate environment, however, will likely put even more pressure on money fund managers, said speakers at the conference, which is sponsored by Crane Data LLC of Westborough, Mass.... Still, money funds added $892 billion in assets in the last two years, representing a growth of 33%, he said." "We're not dead yet," Mr. Crane said.

Vanguard has submitted a response to the SEC's Money Market Fund Reform Proposals. The Vanguard Group, the 7th largest money fund manager with $191 billion, says, "Vanguard strongly supports the majority of the Commission's proposals to amend Rule 2a-7 and certain other rules that govern money market funds under the Investment Company Act of 1940.... Eliminating the ability to purchase 'second tier' securities, imposing a 'weighted average life' requirement of 120 days, instituting daily and weekly liquidity requirements for money market funds, and requiring advisors to implement 'know your customer' procedures and portfolio stress testing will undoubtedly strengthen the credit quality, liquidity, and resiliency of money fund portfolios.... Some of the ideas on which the Commission has requested comment, however, could have unintended consequences that undermine the improvements mentioned above. Fluctuating share prices or disclosing shadow-priced NAV could confuse investors and unnecessarily induce shareholder redemptions during periods of market stress.... Likewise, we believe that some of the Commission's proposed amendments to Rule 2a-7 could adversely affect fund shareholders. For example, the proposed amendment to shorten all money funds' weighted average maturity ('WAM') to 60 days could deny retail investors access to the returns of safe, qualifying longer-dated maturities. The proposal to prohibit money funds from investing in illiquid securities could stifle innovation in the short end of the market.... Vanguard does not support the Proposal that would require money market fund boards to label their funds as 'retail' or 'institutional' and satisfy different weekly liquidity requirements based on these designations."

Standard & Poor's recently issued two releases involving local government investment pools (LGIPs) which hold Reserve Primary Fund. The first update is "Florida Surplus Asset Fund Trust 'AAAm' Rating Remains On CreditWatch Negative" while the second is "Colorado Surplus Asset Fund Trust (CSAFE) 'AAAm' Rating Remains On CreditWatch Negative". S&P says, "[I]ts 'AAAm' principal stability fund rating on the Florida Surplus Asset Fund Trust (FLSAFE) remains on CreditWatch with negative implications, where it was placed Feb. 27, 2009. The initial CreditWatch action was based on uncertainty surrounding the redemption share price or net asset value (NAV) the pool expects to receive from its investments in the Reserve Primary Fund. On Feb. 26, 2009, the Reserve stated that it would set aside $3.5 billion in a special reserve to cover potential damages and legal fees. On May 5, 2009, the SEC filed fraud charges against several entities and individuals who operate the Reserve Primary Fund for failing to provide key material facts to investors and trustees about the fund's vulnerability as Lehman Brothers Holdings Inc. sought bankruptcy protection. We believe that in bringing the enforcement action, the SEC also seeks to expedite the distribution of the fund's remaining assets to investors. Although this SEC action is an important development in resolving the distribution of fund shares, it does not, in our view, eliminate the uncertainty that prompted the CreditWatch actions on FLSAFE."

"FXall and SunGard To Offer Money Market And FX Services To Customers" says a company press release. It reads, "FXall, the world's leading electronic foreign exchange platform, and SunGard are offering money market funds to FXall clients and FX services to customers of the SunGard Transaction Network (STN). These enhancements give customers the ability to access money market investments and FX trades from a single platform. The connectivity between the two platforms gives FXall clients the ability to trade money market funds directly through their current browser interface using SunGard's STN Money Markets portal, a global, multicurrency trading and connectivity solution for institutional money market investors, such as corporate treasurers and hedge funds. This provides a centralized, automated source to buy and sell shares in institutional money market funds, and gives corporate treasurers the ability to research, analyze, trade and report on more than 240 money market funds. In addition, SunGard has enhanced its STN Money Markets portal to provide customers with access to FXall's market leading FX trading solution." Phil Weisberg, CEO of FXall, said, "The ability to offer access to a significant depth and breadth of money market funds is a key development for both FXall's existing client base and the wider FX market." Kevin Rafferty, president of SunGard's wealth management business, added, "With significant growth in demand for FX trading services amongst corporate treasury and money market fund managers, the ability to trade FX is especially important for multinational organizations looking to expand upon their currency trading and get the most out of their excess capital investments. `These organizations require greater diversification of their short-term investments from one reliable platform, and unlimited access to an extensive range of both on- and off-shore money market funds."

Yesterday's Boston Globe wrote "Pain that won't yield", which said, "Money market mutual funds are supposed to be the no-brainer of the investment world. But the basic money market proposition -- a safe place to park cash with ready access, in return for modest yields -- is under stress as never before. Now, money funds have to answer real questions about safety and slash fees, because interest rates are appallingly low. Investors and the firms managing $3.6 trillion in money market assets are both feeling the strain.... Ultralow money market yields are a product of a Federal Reserve committed to very low short-term interest rates and the investment world's flight to safety, which has eased some since last year but remains a powerful force in the market for the most solid short-term securities. All money fund assets amounted to $3.6 trillion as of last week, according to the Investment Company Institute, an industry group. That's down from a peak of $3.9 trillion, achieved while the stock market plunged in April. But it's still up about $1 trillion from its level of two years ago, says Peter Crane of Crane Data LLC, a research firm in Westborough." Crane tells the Globe, "I don't think anyone is depressed about that scenario. You have a lot more issues and challenges, but in the mutual fund business it's all about the assets." Finally, the article says, "Retail money market assets have fallen about 14 percent since their peak earlier this year, the ICI reports. Where did the money go? Short-term bond funds, one step further out in both risk and reward, have been big winners. Many banks are paying for money market business, offering more than competitive yields of up to 1 percent for larger amounts. For now, and the foreseeable future, the no-brainer of the investment world is a much more complicated proposition."

New York AG Sues Schwab Over ARS. The suit alleges, "Schwab engaged in fraudulent and deceptive conduct in the sale of hundreds of millions of dollars of auction rate securities to the investing public. Schwab misrepresented auction rate securities to hundreds of its customers as safe, liquid investments that were suitable for their short-term, cash management purposes. In fact, auction rate securities were complex financial instruments with significant, inherent and increasing liquidity risks. Schwab persistently failed to disclose or made misrepresentations that concealed the risk that customers would not be able to sell their auction rate securities and could thus lose liquidity should auctions fail." The complaint continues, "Audio recordings produced by Schwab confirm that Schwab brokers repeatedly misled investors about the risks of investing in these securities, describing auction rates securities as liquid investments from which investors could always withdraw their money. One Schwab broker told a customer: 'I think [auction rate securities are] great alternatives to cash, frankly.' Another described preferred auction rate securities to a customer as a 'short-term institutional holding instrument' that was particularly suitable for managing the customer's cash balances: If you need to have that access to them at any time, that's a good place for those to be. You know if you think you might need to get into that money, that's probably as good a place if not better than anywhere to leave them."

"Money fund woes fuel manager flight" writes this week's Investment News. The article says, "More asset managers are getting out of the money market fund business because the regulatory and market environment often makes offering such funds unprofitable. Aston Asset Management LLC of Chicago, formerly ABN AMRO Asset Management Holdings Inc., became the fifth firm in two years to leave the money fund business when in July it liquidated its money funds, according to Crane Data LLC, a Westborough, Mass., money fund consulting firm. The others are Calamos Advisors LLP of Naperville, Ill., Credit Suisse Asset Management LLC of New York, Munder Capital Management of Birmingham, Mich., Utendahl Capital Management LP of New York and Monarch Investment Advisors LLC of Beverly Hills, Calif. Janus Capital Group Inc. of Denver and Putnam Investment Management LLC of Boston have exited the institutional-money-fund business but still offer retail money funds." The Investment News piece adds, "Largely because of low yields, assets in money funds stood at $3.6 trillion July 29, down $196 billion, or 5.1%, from their level at Dec. 31, according to Crane Data. And because interest rates aren't expected to rise anytime soon, assets will decline by a total of 10% by the end of the year, predicts Peter Crane, president of Crane Data.... It has benefited companies such as Federated, the third-largest money fund manager, with $294 billion in money fund assets at the end of July, according to Crane. During the past few months, Fifth Third Asset Management Inc. of Cincinnati, a unit of Fifth Third Bancorp, and Nationwide Asset Management LLC of Columbus, Ohio, a unit of Nationwide Mutual Insurance Co., outsourced money fund management to Federated, according to Crane. Other firms that have benefited from the current environment include Fidelity Investments of Boston, the largest money fund manager, with $506.33 billion in money fund assets, which received money fund assets from Capital One Asset Management LLC of New Orleans, a unit of Capital One Financial Corp. of McLean, Va. State Street Global Advisors of Boston, the 18th-largest money fund manager, with $49.68 billion in such assets, received money fund assets from Neuberger Berman LLC of New York."

"Vanguard completes merger of two money market funds" is the title of a posting on www.vanguard.com. The release says, "Vanguard has completed the merger of the $6.2 billion Vanguard Treasury Money Market Fund (VMPXX) into the lower-cost $20.2 billion Vanguard Admiral Treasury Money Market Fund (VUSXX), effective at the open of business on August 11, 2009. The merger of Vanguard Treasury Money Market Fund, which had an expense ratio of 0.28%, into the Admiral Treasury Money Market Fund, with its lower expense ratio of 0.15%, reduces expenses for Treasury Fund shareholders, while helping the yields of the funds remain competitive. Vanguard's actions come amid continuing strong demand for government-backed securities, which have served as a safe-haven during the global financial crisis. This increased demand, coupled with cuts to prevailing interest rates by the Federal Reserve, has driven yields of government-backed securities to record lows, with current one- and three-month Treasury bills yielding less than 0.20%. As securities in Vanguard money market funds mature, the reinvestment of assets into new, lower-yielding securities decreases the funds' yields." In other news, ICI's weekly "Money Market Mutual Fund Assets", says, "Total money market mutual fund assets decreased by $12.83 billion to $3.594 trillion for the week ended Wednesday, August 12.

USA Today writes "Money market funds are yielding almost nothing", which says, "Money isn't everything, at least to investors in money market funds. Yields are at all-time lows, and nearly a quarter of funds yield nothing at all." (Our Crane 100 Money Fund Index reached yet another record low yesterday, an annualized 7-day yield of 0.14%.) The piece quotes Peter Crane, editor of newsletter Money Fund Intelligence, "They're taking more of the funds' yield to pay expenses than to pay investors." USA Today says, "Some $27.5 billion fled money funds the week ended Aug. 5, says the Investment Company Institute, a fund industry trade group. Some of that money is going to banks, which can offer any rate they want. The average one-year bank CD, for example, yields 1.88%. But investors apparently feel that moving to a bank account is too much hassle for too little return. Assets in money funds have fallen to $3.6 trillion from $3.8 trillion at the end of 2008. Yet that's still nearly $500 billion more than at the start of 2008. Many fund companies would welcome an exodus from money funds. Investors typically move money to another fund in the fund family, and most funds charge higher expenses than money funds, Crane says." See also, `Kiplinger's "Banks Trounce Money-Market Funds".

"Stable-value wrap coverage disappearing" writes Pensions & Investments. The article says, "Wrap capacity for stable value funds has evaporated, leaving DC plan executives scrambling to find insurance for new assets flowing into these funds as many wrap providers are under financial pressure." P&I quotes Edward Lilly, executive director of the New York State Deferred Compensation Plan, "The marketplace for wrap coverage has completely dried up." The piece explains, "`Wraps are contracts provided by insurers, banks or other financial companies that protect stable value funds' bond portfolios from wild swings in interest rates, guaranteeing participants will receive the funds' book value even if the market value falls. They are used by stable value managers and sponsors of plans that offer stable value as an investment option.... One area of concern: The market value of underlying securities has fallen in many stable value funds, increasing the pressure on wrap providers to make up the difference. The average stable value fund tracked by research firm Hueler Analytics Inc., Minneapolis, had a market value that was 95.6% of its book value as of March 31, compared with 99.4% at the end of 2007, said President Kelli Hueler."

"State Street says legal exposure may be larger" writes The Boston Globe. It says, "In a regulatory filing today State Street said it may need to set aside more money to settle investigations by federal and state regulators over how it handled its clients' investments. In June, State Street said the staff of the US Securities and Exchange Commission had notified the company it was was considering bringing civil charges against the bank. The US investigation appears to center on whether State Street misled clients about the safety of some bond funds that were pitched to pension funds and other institutional investors as conservative investments, but instead sustained losses from subprime mortgage exposure.... State Street has also been sued by investors who claimed the company promised that some of of its fixed income funds would offer stable, predictable returns, with only slightly more risk than ultrasafe money market mutual funds. But the funds racked up large losses after placing riskier bets in mortgage-backed securities, home-equity loans and other investments."

Money Market Executive writes "Investors Leave Money Funds for More Risk. The article discusses recent money fund outflows but says, "But it has been those money funds that have kept mutual fund investors appeased in the downturn. Safe investments like cash and money funds did a fantastic job of protecting assets during the recent bear market when the average equity fund lost more than 30%." The piece quotes Steve Meier, CIO for cash at State Street Global Advisors, "Investing in cash has become less satisfying for investors. The second quarter saw a tremendous reduction in risk aversion." It also quotes former Moody's analyst Steve Schoepke, now director of research at Financial Research & Analysis Associates, "How long will these firms be willing and able to subsidize money funds?" The article also quotes our Peter Crane, who counters, "A trickle out of the money market space tends to be a gusher in other asset classes.... The survivors of this bear market were the ones who kept their money market funds. The biggest winners in the mutual fund game had the broadest exposure in money funds. You've got to have money market funds to survive a bear market. Anybody exiting this space would be a fool." Finally, Crane tells MME, "The floating NAV does not even have a small likelihood of becoming a reality. It will be crucified during the comment period."

The Investment Company Institute's "Money Market Mutual Fund Assets" report says, "Total money market mutual fund assets decreased by $27.45 billion to $3.606 trillion for the week ended Wednesday, August 5.... Taxable government funds decreased by $19.20 billion, taxable non-government funds decreased by $10.51 billion, and tax-exempt funds increased by $2.26 billion." ICI adds, "Assets of retail money market funds decreased by $6.94 billion to $1.190 trillion. Taxable government money market fund assets in the retail category decreased by $2.37 billion to $191.81 billion, taxable non-government money market fund assets decreased by $4.54 billion to $737.35 billion, and tax-exempt fund assets decreased by $43 million to $260.90 billion. Assets of institutional money market funds decreased by $20.51 billion to $2.416 trillion. Among institutional funds, taxable government money market fund assets decreased by $16.83 billion to $1.005 trillion, taxable non-government money market fund assets decreased by $5.98 billion to $1.226 trillion, and tax-exempt fund assets increased by $2.30 billion to $184.70 billion."

CFO.com writes "Buyer's Remorse", which says, "Although auction-rate securities have received scant media attention since [freezing in February 2008] then, they have not returned to health. In fact, the market for them remains decidedly frozen.... Experts say that CFOs and treasurers should have seen signs of trouble. Indeed, even if ARS investors had done nothing more than simply follow sound cash-management practices, the damage would have been far less." The piece says, "For example, nearly half of organizations polled by the Association for Financial Professionals (AFP) in 2008 had policies limiting their investments in ARS to 25% of the portfolio, yet one in four allowed ARS investments to reach 50% or more." It quotes one source, "You can't do anything about greed, but some clients had 100% of their excess cash invested in ARS. That violates a cardinal rule of investment: diversify asset classes." CFO adds, "`Investors were also not adequately compensated for the risk that auctions could fail, notes Adam Dean, president of SVB Asset Management. Average premiums over money-market funds ranged from just 15 to 20 basis points." See also SmartMoney's "The Best Places to Store Your Cash" <i:http://www.smartmoney.com/Investing/Short-Term-Investing/The-Best-Places-to-Store-Your-Cash/>`_.

"Money fund assets fell 6% in 2Q" says Investment News. The article writes, "Assets of money market mutual funds declined by $215 billion, or 6%, in the second quarter, according to Crane Data LLC, a Westborough, Mass.-based research firm. Money market fund assets stood at $3.6 trillion on July 29, Crane reported, down $196 billion, or 5.1%, from their level at Dec. 31." IN quotes Peter Crane, "I estimate that assets will decline by a total of 10% by the end of the year because of the ultra-low interest rates. The Fed is forcing people into riskier assets." The article writes about our Money Fund Distribution Survey, "The report found greater concentration in the money market business, with the largest 25 fund complexes accounting for 94.3% of money fund assets as of June 30, compared with 91.2% a year ago." In other news, see the latest comment on the SEC's Proposed Money Market Fund Reform from iMoneyNet Managing Director Randy Wood.

"Yield Curve at Towering Heights" writes The Bond Buyer. The article discusses the steepness of the municipal yield curve, saying, "A confluence of factors has yanked short-term rates to the floor. One is that some of the products once vital to the short-term muni sector have imploded. Because obtaining the necessary letter-of-credit backing has become more difficult and expensive, sales of variable-rate debt have tumbled 78.2% so far this year, according to Thomson Reuters.... `[Also], [a]fter a wave failed auctions in 2008, the auction-rate securities sector is moribund." Bond Buyer continues, "The collapse in supply of short-term notes has done nothing to dampen demand, said Jeffery Timlin, a portfolio manager at Sage Advisory Services .... Another curve-steepener: some of the cash that darted for safe havens during the throes of the credit crisis has re-emerged in search of higher returns." It adds, "According to the Federal Reserve, households had $7.88 trillion stored in bank deposits and money market funds at the end of the first quarter. Friedlander has argued for months that money will not stay there forever." Bond Buyer says of fund flows, "Of the 25 funds with the heaviest inflows this year, seven have the word 'ultra-short' in their name, including the top two."

The Boston Globe writes "What's the best place to stash your savings?". It says, "Just as Americans are saving more money, interest rates on traditional savings vehicles have hit rock bottom." The article compares "bank savings accounts," "money market bank accounts," "certificates of deposit," "U.S. bonds," and "money market mutual funds". On money funds, it says, "Unlike bank accounts, your money isn't insured. But money market funds generally invest in US treasuries and other relatively safe, short-term investments, so it's very rare to lose money. And you can cash out any time, making it a convenient place to park cash. But the interest rates are currently meager, even compared with bank accounts."