Money Market Fund Goes Below Par

Money market funds work by maintaining a nav of $1.00 and issuing a market rate yield. That’s the theory anyways, and now the Primary Fund by Reserve has said that the value of investor’s money has dropped below the $1.00 mark to about $.96-.97 cents. This is apparently only the second time in history for this to occur in the United Sates.

Late last year we wrote on an “enhanced cash” fund that broke the $1.00 market and now what is generally considered to be one of the safest forms of investments, money market funds, have shown that they too are susceptible. Citing large losses on what is now worthless paper issued by Lehman Brothers, the fund will undoubtedly not be the last.

Rapidly deteriorating confidence in equities, real estate, bonds, and now money market funds leaves one wondering how much farther up the food chain we can go. Wherever the bottom ends up being, the reversion to normalcy seems to be getting farther and farther out with each new economic maelstrom we hit.

Similar Posts:

• Lehman To Dump $40B Worth of Real Estate Assets
• Commercial Paper Market “History”
• Pension Funds Working Their Way Back Into The Market
• Credit and Equity Markets In For Massive Turmoil According to RBS
• Short-Term “Enhanced Cash” Fund Goes Below Par

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