Extraordinary events are piling up on
Wall Street so fast, it's hard to know where to focus. Forgetting
the prospective bailout of AIGfor a
moment, since every media outlet is on that one, the most shocking
development of the day for me is news that a $60 billion money
market fund "broke the buck" on Monday due to losses in Lehman
Brothers paper that it held. So much for the safety of
"cash".
The
Reserve Primary Money Fund (RPFXX)has become
the first money-market fund in more than a decade to lose money
because its board was
forced to write down $785 million worth of LEH debt
to zero. The fund has reportedly seen assets plunge by 60%
to $23 billion in the past two days after holders got wind of the
fact that it would have to cut its net asset value to less than its
usual $1 per share.
Reserve Primary, which is one of the oldest money market funds
in the country, is now trading at 97 cents, although it is showing
up on the MSN Money site at $1. Its founder is considered the
father of the money market fund, and he was one of the last
holdouts against buying higher-yielding commercial paper rather
than super-safe Treasuries. The company said in its that it would
suspend redemptions for seven days while it tries to straighten
things out. To review its most recent list of holdings
I called the Reserve this morning, got through after a 30 minute
hold. Told me 2 other money funds are affected, some
international mm and another, but said that problems are isolated
to particular funds, and the US treasury bill fund is safe..
Newsletter
Subscribe to our email list for regular free market updates
as well as a chance to get coupons!
Title: Money Fund Cash trashed: Money
Posted by Michael on 17th of Sep 2008 at 09:15 am
Cash trashed: Money fund blows up
The Reserve Primary Money Fund (RPFXX)has become the first money-market fund in more than a decade to lose money because its board was forced to write down $785 million worth of LEH debt to zero. The fund has reportedly seen assets plunge by 60% to $23 billion in the past two days after holders got wind of the fact that it would have to cut its net asset value to less than its usual $1 per share.
Reserve Primary, which is one of the oldest money market funds in the country, is now trading at 97 cents, although it is showing up on the MSN Money site at $1. Its founder is considered the father of the money market fund, and he was one of the last holdouts against buying higher-yielding commercial paper rather than super-safe Treasuries. The company said in its that it would suspend redemptions for seven days while it tries to straighten things out. To review its most recent list of holdings
I called the Reserve this
Posted by trade on 17th of Sep 2008 at 09:19 am
I called the Reserve this morning, got through after a 30 minute hold. Told me 2 other money funds are affected, some international mm and another, but said that problems are isolated to particular funds, and the US treasury bill fund is safe..