The current market can not only confuse investors, they can lead to major anxiety, so why not an exchange traded fund (ETF) to help quell these feelings?
It appears that the credit crisis has now penetrated the money market funds, thanks to the the ripple effect. Some money market managers are known to absorb some of the losses to keep share value above $1.00 per share, but that may be quite hard to do in this market of capital loss. Some funds have “broken the buck,” as it’s known on Wall Street.
ETFs give you full transparency, so that you always know exactly what you own.
The Federal Reserve did say last week that it would insure money market funds with up to $50 billion from the Treasury’s Exchange Stabilization Fund, reports Sue Asci for Investment News.
WisdomTree Current Income Fund (USY) launched in May of this year, and while it is not a money market fund, it acts as one. The ETF is conservative and is run by Mellon Capital, a specialist for money market funds. The fund holds treasuries, agencies and commercial paper and repos. The fund has no exposure to Lehman Brothers, AIG, WAMU, Merrill Lynch, Morgan Stanley or Goldman Sachs.
Exposure to short term Treasury bills and agency notes will occur if need be. Furthermore, the ETF pays a monthly dividend.
Since its inception on May 22, it’s up .24%.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.