Money Funds and the Regulators

by Mike Krasner

Money Funds And The Regulators Splash image

It is highly likely that as a member of AAII you have savings or retirement money tucked away in a money market mutual fund (MMF), or indeed maybe more than one.

The Investment Company Institute (ICI), the trade association that speaks for the mutual fund industry, cited in its 2013 “Fact Book,” year-end 2011 data attributed to The IRA Investor Database showing that traditional IRA investors allocated 13.9% of their portfolios to money market funds while in their 30s and 13.9% when in their 60s. Overall, ICI stated that retirement account assets in money market funds totaled $379 billion in 2012.

Money fund investors are all given a fund prospectus that spells out the fund’s objective and what types of securities it is allowed to buy or specific security types it is not allowed to hold in its portfolio. The prospectus also covers the benchmark index used to measure investor returns, how the fund allocates its expenses, how to invest in the fund, and other pertinent information.

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Mike Krasner is managing editor at iMoneyNet, which provides information on money market funds to institutions.


Discussion

Roger from Louisiana posted 10 months ago:

The Gov't should leave money market funds alone. Every time they mess with something they make it worse. They ruined our energy supplies - instead of making our energy supply more independent, they made us more dependent; they ruined our education system; they ruined our health system; they have made millions more dependent on gov't handouts; and much much more. We have been over-regulated to the breaking point. Once we were the free-est nation in the world. All to soon we have dropped to 10th place. At the rate we are going we will soon be a 3rd-world country.


harryrich from Ohio posted 10 months ago:

Given the fact that the MMF manager's income and decision-making systems are a large part of MMF cost I'd think a manager could have a hard time being objective in a choice between reducing cost and increasing risk. So, regulation seems appropriate. The question as to whether it will work or not is beyond me.

My fear if MMF share prices are allowed to float is that keeping track of or avoiding wash sales, particularly with multiple accounts, may become a nightmare.

Harry


Charles Rotblut from Illinois posted 5 months ago:

Investment News has a recent update on what is happening with money market reform:


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