Riding Out ETF, Market Turmoil in Money Markets Could Trade One Problem for Another
March 10th at 3:00pm by Tom Lydon
When the bear comes storming through the markets and stomps on stocks and exchange traded funds (ETFs), many investors turn to money market funds to wait it out in the short term.
But are they really so safe? According to Joe Morris for Ignites, several funds are being bailed out. Legg Mason says it’s spending more money on the funds to do so, while Bank of America’s Columbia unit is reorganizing one of its funds to protect investors from losses.
In spite of the woes, both Columbia and Legg say the funds are still reporting inflows. Columbia says its money fund assets hit $152 billion at the end of 2007, while Legg says its funds have garnered $11 billion in inflows.
While these firms are taking steps to protect investors, what if there was a big money market fund where the sponsor was either unable or unwilling to infuse cash?
It wouldn’t be pretty.
