Page Perry

Another asset class is “feeling the heat” of the unstable investment market. The historically reliable asset class of money funds has been hit by the financial crisis, providing minimal yields, at best. The money fund, typically investing in short-term, high-grade IOUs, was once considered “a pillar of safety.” In the past, even if the fund invested in commercial paper, it would only do so in extremely creditworthy corporations, thereby preserving an investors’ principal and paying interest, minus expenses, by investing in highly rated securities. Recent practices of money funds have left investors questioning the integrity of and regulators debating an overhaul of these funds.