Wednesday, September 17, 2008

Now Money Market Funds at Risk?

I was reading this Minyanville article and came across this nugget.

The Reserve Primary Fund, a money-market mutual fund with $62.6 billion in assets as of August 31st, fell below $1 a share in net asset value—also known as “breaking the buck”—due to a $785 million loss on Lehman Brothers (LEH) debt, which is now being valued at zero.

As of 3:00 pm on Tuesday, total fund assets stood at $23 billion, or a $40 billion hit since Friday. Redemptions have been delayed for as long as seven days as the fund wrestles with a run.

Yes that money market fund had $785 million tied up in Lehman Debt that just went poof. I agree with Minyanville's advice when they say stash your rainy day money above $100K in Treasuries and not all in money market funds. Especially if those funds are only 80% treasuries and 20% crappy Lehman Debt.

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