Money Market Mutual Fund Resources
Below we list a number of links to websites which may be of interest to money market and mutual fund professionals and investors. If you have a money fund-related website or a link we're missing, please submit it to: links@cranedata.com.
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Money Market Mutual Fund Families
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Additional Money Fund Resources
Fidelity Investments published, "Get More Yield on Your Cash," subtitled, "CDs and short-duration bonds may offer higher yields but more risk than savings accounts." The article explains, "In early February, average rates on savings accounts nationally were around 0.11%. That's not nothing, but it sure is close. The bad news for savers is that there isn't a lot of yield to be found, at least not from investments that are safe enough to be considered as a home for your cash. But even if you can't earn a lot on your cash, that doesn't mean you can't do significantly better. "There are a range of income options that can offer a meaningful increase in income; you could potentially increase the yield on your savings by a significant amount," says Richard Carter, a vice president of fixed-income products and services at Fidelity. "The key is to understand what you need the money for, and then find an option that makes sense for your situation."" The piece reviews high-yield savings accounts, CDs, money markets, and short-duration bond funds. On money market funds, it says, "The good news: Money market funds offer easy access to your investment and very little risk. Held in your brokerage account, they come with check-writing and ATM card access similar to a savings account, and making these investments a good option for funds you may need in a hurry. And, if interest rates rise, those higher rates will pass through to money market funds quickly. Some prime and government money market funds have seen yields tick up with the Fed's year-end move, with yields on some prime funds at 0.20%-0.30%, and the average prime fund offering about 0.12%. The bad news: The yields offered by the types of securities in which money market funds invest have been stubbornly low in recent years.... So you may find security and easy access to your funds, but you won’t find much yield unless the interest-rate environment continues to change. You should also note some regulatory changes taking place for prime and municipal money market funds. In a time of market stress, these non-government types of funds could be subject to a fee or temporary halt on withdrawals. So they may no longer be as liquid as U.S. Treasury or government money market funds." In other news, "The Federal Reserve released the Minutes from its January 26-27 FOMC meeting. On the Reverse Repo Program they said, "The Committee then resumed its consideration of matters related to the System's reverse repurchase agreement (RRP) facilities, focusing in particular on the appropriate aggregate capacity of the ON RRP facility going forward.... [P]articipants reiterated that the Committee expects to phase out the facility when it is no longer needed to help control the federal funds rate, and they unanimously expressed the view that it would be appropriate to reintroduce an aggregate cap on ON RRP operations at some point."
The SEC posted a primer entitled, "Ultra-Short Bond Funds: Know Where You're Parking Your Money. It says, "Ultra-short bond funds are mutual funds that generally invest in fixed income securities with extremely short maturities, or time periods in which they become due for payment. Like other bond mutual funds, ultra-short bond funds may invest in a wide range of securities, including corporate debt, government securities, mortgage-backed securities, and other asset-backed securities. If you are considering investing in an ultra-short bond fund, keep in mind that ultra-short bond funds can vary significantly in their risks and rewards. In fact, some ultra-short bond funds may lose money despite their investment objective of preserving capital. The level of risk associated with a particular ultra-short bond fund may depend on a variety of factors, including: Credit Quality of the Fund's Investments -- It's important to know the types of securities a fund invests in because ultra-short bond funds may experience losses due to credit downgrades or defaults of their portfolio securities. Credit risk is less of a factor for ultra-short bond funds that principally invest in government securities. By contrast, if you invest in an ultra-short bond fund that invests in bonds of companies with lower credit ratings, derivative securities, or private label mortgage-backed securities, you'll generally be subject to a higher level of risk. Maturity Dates of the Fund's Investments -- The maturity date of a security is the date that it becomes due for payment. An ultra-short bond fund that holds securities with longer average maturity dates will be riskier than a fund with shorter average maturity dates — assuming the funds are otherwise similar. Sensitivity to Interest Rate Changes -– Generally, when interest rates go up, the value of debt securities will go down. Because of this, you can lose money investing in any bond fund, including an ultra-short bond fund. In a high interest rate environment, certain ultra-short bond funds may be especially vulnerable to losses. Before you invest in any ultra-short bond fund, be sure to read about a fund's "duration," which measures how sensitive the fund's portfolio may be to changes in interest rates." Finally, note that Crane Data plans to launch a new publication, Bond Fund Intelligence, to cover the largest ultra-short bond funds, ETFs, "enhanced cash" vehicles, and separate accounts in this space. Contact us at info@cranedata.com for more information or to receive the beta issues of our pending Bond Fund Intelligence.
USA Today published a column, "Keeping Your Cash Safe: What New SEC Rule Means," by Sharon Epperson at CNBC. Epperson writes about the differences between money market mutual funds and money market deposit accounts. "Millions of investors use money market mutual funds to stash "cash" in their portfolios, since they're generally viewed as safe, convenient short-term investments -- and there are major changes on the horizon designed to make them safer. But are money funds the safest place for your cash? Many consumers don't know what distinguishes money market funds and money market accounts offered at their local bank or how to assess which is the safest place for their hard-earned dollars.... Money market mutual funds are investments and are not insured. The funds invest in low-risk, highly-liquid investments like U.S. Treasury security (T-bills), certificates of deposit (CDs) and corporate commercial paper. They are regulated by the SEC and their value is determined by underlying investments, but they are not guaranteed investments. Money market deposit accounts, like savings accounts, are FDIC insured. A money market account is like a "souped-up" savings account that can also invest your money in treasury notes, CDs and other short-term investments to give you a slightly better yield than a regular savings account. As with a savings account, the federal government insures your deposits in a money market account up to $250,000. Money market account rates are currently better than money market fund yields. Historically, money market funds have had higher yields than bank deposits. But with interest rates so low, yields on money market funds after expenses are near zero. While the average yield on a money market fund is 0.01%, savings and money market account rates are about 0.10% on average. Some online banks offer money market account rates of almost a full percent, according to Bankrate.com. Where is the safest place for your cash? It depends on how you'll use it. If you need the money for emergencies -- to pay household bills if you lose your job or fix the boiler or roof of your home -- you may want to put those funds in a money market account at the bank. On the other hand, if you want to keep some of your investment portfolio in "cash," a money market fund may be the easiest way to make sure you have funds on the sideline that can readily be moved into other investments. For most investors, it's probably a good idea to have a little money in both."
Wikipedia's definition of money fund. The free encyclopedia also explains retail vs. institutional funds, and gives some history.
NYSE's "Informed Investor" Questions About Brokerage Sweep Accounts This publication lists questions investors should ask regarding cash "sweep" options in their brokerage accounts.
The Deposity Trust Company (DTC) provides back-end processing and clearing of money market securities and is a member of the Federal Reserve System.
The Commercial Paper Issuers Working Group (www.cpiwg.org) is an organization representing 27 of the largest commercial paper (CP) issuers.
Money Fund Ratings: Standard & Poor's Website shows the most recent fund ratings, ratings methodology, and ratings by domicile.
ICI's Frequently asked Questions About Money Market Mutual Funds The ICI (Investment Company Institute) explains the basics of money market funds.
- ICI Mutual Fund Fact Book 2019 Investment Company Institute's
- annual guide to mutual funds.
Rule 2a-7 of the Investment Company Act of 1940 The SEC's (Securities and Exchange Commission) regulations on money market mutual funds.
- Instruments of the Money Market
- An overview of money markets and money market securities published by the Federal Reserve Bank of Richmond.
Fidelity's "What Are Money Market Funds?" Fidelity Investments' definition and explanation of money market mutual funds.
Investorwords.com Investorwords.com's definition of money fund.
