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>I do not believe that any U.S. money market fund has
> ever come into question resulting a drop in share price below $1 (per
> share).
Not true. Back in the mid-to-late 70's, a fund had a problem (First
Chicago seems to ring a bell but I don't think that banks could offer MF's
then). The problem was that they extended average maturity and were
amortizing rather than marking-to-market. Rates went up and redemptions
occured forcing them to sell securities at a loss that they had planned to
hold to maturity. What happened? The fund sponsor made the NAV whole by
injecting capital.
That's why you never see an average maturity at 120 days and why all funds
are marked-to-market.
> If strength of a U.S. money market going below $1 ever came into question,
> it is my opinion that you have far more things to worry about at that time
> then what you have parked in a U.S. money market fund!
Nahhhhh. But if a major paper issuer got into trouble, say GE Capital or
GMAC, then I'd say watch out.
> Bottom line - it isn't going to happen and I don't believe there has been
an
> ounce of concern among anyone in the industry that would cause them to
worry
> about it(my opinion).
I disagree with that. Having been away from the business for a number of
years, I don't know what the current short term credit concerns are but I
would suspect that JPM & GE paper is being watched and I'm wouldn't be
surprised if Japanese bank paper is not being bought by most if not all
funds. Some banks maybe on a watch list because of their exposure to Brazil
and Argentina. I know that was the case for Canadian banks in the early
80s.
Regards,
Mike
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