Thursday, September 18, 2008

Reserve Primary Fund "Breaks the Buck"

The Wall Street Journal reported that Reserve Primary Fund, a money market fund, "broke the buck" when it traded at 97¢. The Journal believes this was an "isolated incident" from their survey of analysts.

Article excerpts:
Reserve Primary Fund "appears to be an outlier," says Peter Crane, who tracks money funds. "People got worried that Reserve wouldn't be able to bail the fund out, so they started running." The Reserve Fund, which had assets of around $62 billion on Friday, had dropped to about $24 billion on Tuesday.

...on the heels of the Primary Fund's announcement, other fund companies, such as Vanguard Group, American Century Investments and Charles Schwab Corp., have posted notices on their Web sites assuring investors that none of their money-market funds hold any securities issued by Lehman or American International Group Inc.
I wonder if this is the same group of analysts that missed the housing bubble and the effect its bursting would have on Wall Street financial firms. I hope not because I own money market funds in both my core and explore portfolios at several major firms I trust.

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