HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 7642
Location: Houston, Texas & Los Angeles, California
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 Posted: Sun Mar 02, 2008 1:54 pm Post subject: Money Market Funds |
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The flight to cash continues:
http://www.ft.com/cms/s/0/d48da1e0-e87c-11dc-913a-0000779fd2ac.html
| Quote: | Money market mutual fund assets rose $19.34bn to a record $3,428bn for the week ending February 27, according to the Investment Company Institute. Money market funds have risen from $2,763bn at the end of August, and $2,399bn a year ago.
“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.
A series of Federal Reserve interest rate cuts since September has also prompted investors to move cash into money market funds, as the interest earned from these investments tends to lag the decline in the Fed funds rate.
“When you get rate cuts stacked on each other, institutions ride the lag,” said Mr Crane. Money market funds have a reputation for safety, because they promise to maintain the value of every dollar invested.
The last day of February marked the end of the first quarter for some Wall Street investment banks, and they also appeared to be shifting into less risky assets in the Treasury and money markets. |
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