Press Releases Archives: March, 2008

Over the weekend, Crane Data Founder & CEO Peter Crane appeared on Consuelo Mack's WealthTrack, a financial TV show airing on most PBS stations. This week's show featured "hedging against volatile market swings". (See the full video here.) Mack asked about how to differentiate among "not equal" cash equivalents. Crane replied, "You really need to look for 'money market in the title, whether it's a money market mutual fund ... or bank money market deposit account. If it says 'money market', it gives you that daily liquidity, and those investments have yet to be impaired."

Mack also asked, "Are there any money market funds that are vulnerable?" Crane told her, "It's always possible. As they tell you in the prospectus, these things are not guaranteed. But it's highly unlikely. There have been 12 instances to date where advisors have purchased troubled securities out of the funds in order to protect investors. That's the most probably outcome if something further occurs." He added that though money funds aren't FDIC insured, they can't invest in non-cash investments like auction-rate securities.

Crane also said, "Though it pains savers, you have to take what the Fed gives you. It hurts, but now's not the time to take risks." He recommended tax-exempt money market funds, like the largest Fidelity Municipal Money Market Fund (FTEXX), for those in the highest tax bracket or two, and added on municipal money fund safety, "It would take severe events to breach the $1.00 NAV."

Crane Data Founder & CEO Peter Crane is scheduled to appear this weekend on the PBS TV show WealthTrack. Host Consuelo Mack will discuss "How can individuals hedge their nest eggs against volatile market swings?" with Crane and fellow guests Mark Cortazzo of Macro Consulting Group and James Lebenthal of Lebenthal & Company. (See schedule for local listings of PBS station times.) Crane will discuss the threat to money market funds, auction-rate securities, and municipal money fund investing.

Kiplinger's writes "Are Money-Market Funds as Good as Cash?", which examines the types of money market investments, and the types of money funds in particular. It quotes us, "Peter Crane, who reads shareholder reports and prospectuses for a living, says trying to spot flaws in a money-fund portfolio is impossible. His analogy: You're flying in a 747 over the Atlantic when the ride gets unsteady. So you burst into the cockpit (try to forget 9/11) and study the instrumentation to see if the plane has a problem. Good luck."

Kiplinger's continues, "Yet Crane isn't totally blase. He figures that, in the past year, more than a dozen sponsors have had to inject their own capital into money-market funds to avoid writing down the value of the portfolios from $1 a share to 99 cents or less."

Financial weekly Barron's features Crane Data's website, in its latest Electronic Investor column, "Where to Stash the Cash". Founder & CEO Peter Crane tells Barron's, "Money-market mutual funds, money-market bank accounts, -- anything in cash has seen yields fall through the floor recently, and the outlook is for more of the same.

The article says money fund yields have fallen from 5% "last summer" to below 3.20% (now 3.14%), citing our Crane 100 Money Fund Index. It says, "Crane's Website profiles and maintains direct links to these [money funds] and a variety of other cash funds, and reports on developments in cash investments on a daily and detailed basis."

Barron's adds of, "It's a good place to start your search for that extra quarter-point return, although Crane cautions against investing in funds whose yield is more than a half-point above or below the Crane 100 Money Fund Index's average yield."

USA Today's John Waggoner says that two funds are already yielding below 1%, with more to follow. "Some funds now collect more money in expenses than they pay investors. That hasn't happened since 2001," he says.

Waggoner also says, "Money funds invest in short-term, high-quality IOUs and distribute the interest to investors. When the Fed reduces rates, the yields of money funds tumble, too. The Fed has cut its key federal funds rate five times, to 3%, since September."

"It's a good time to look at your expenses," says Peter Crane of Money Fund Intelligence, which tracks the funds," quotes the piece.

The Financial Times writes on the "Flight of cash into money market funds" in its Sunday edition. The article discusses the recent $1 trillion-plus buildup of money funds assets (over 52 weeks) and flight to Treasuries and cash. "There is a flight to cash and the build-up has been massive and unprecedented," said Peter Crane, publisher of the monthly Money Fund Intelligence newsletter," quotes the FT. It also quotes Crane, "When you get rate cuts stacked on each other, institutions ride the lag." The piece adds, "The extent of the move in the Treasury bill markets, where there has been so much new supply, is an indication of how large the month-end settlement date pressure is for the banks," quoting Lou Crandall of Wrightson ICAP. Plus, see WSJ's "How the Credit Mess Squeezes You".