Sound As A Dollar

Money market funds can invest only in the highest-quality securities, so they can't buy sub-prime debt. Though some funds have bought commercial paper from issuers that do hold sub-prime mortgages, so holdings can deteriorate. This is according to an article in Business Week magazine. However, the chances your money market fund owns any of these securities is minimal.

The sub-prime crisis has been going on for three months, while a money fund portfolio turns over, on average, every 30 days. The vast majority of securities that held any kind of threat are therefore long gone.

The only time a money market fund's net asset value fell below $1 was in 1994 when a fund was liquidated and investors got 96 cents on the dollar. It was an institutional fund, so no individual investors lost money.

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