This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Money-Market Funds Hit Record Level

Total assets in money-market mutual funds reached a record of nearly $3.5 trillion this week, as the flight to safety -- which has its roots in the start of the credit crunch last summer -- continued.

IMoneyNet says in its weekly Money Fund Report that $14.5 billion was added to money-market funds for the week ended Tuesday.

"We have weeks where there are net outflows, but going over the past year since the credit mess began we've seen inflows almost every week," says Connie Bugbee, managing editor of the report.

Investors shifted $5.3 billion in cash away from prime institutional funds into municipal-bond funds, which are considered safer. Government funds do not hold commercial paper, which is a short-term debt instrument for corporations that is considered riskier because it is not backed by collateral.

Investors also moved some cash from taxable funds into nontaxable funds as yields reached near-parity. Taxable yields have been dropping since the Federal Reserve began slashing its interest-rate target in September, and are now close to that current 2% level.

Concern about the health of monoline insurers also persuaded some investors to take their cash out of institutional funds, Bugbee notes. Moody's recently placed the top-tier "AAA" ratings of Financial Security Insurance (FSA) and Assured Guaranty (AGO - Get Report) on review for possible downgrades, citing "elevated risks with the financial guaranty insurance market." It placed the lower-tier "B2" ratings of XL Capital Assurance (XL - Get Report) under review for a possible downgrade as well.

Taxable-fund yields now average 1.87%, up slightly from 1.86% a week earlier. Tax-free funds rose quite a bit more, to 1.73% from 1.67%.

As a result, tax-free fund assets, "mushroomed" to a record of $521.4 billion, a one-week gain of $13.36 billion, according to Money Fund Report.

Bugbee says that while taxable fund yields closely follow the Fed target, "the tax-free side kind of marches to its own drummer." Once yields normalize a bit, she expects cash to flow back into institutional and other taxable funds.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AGO $23.73 -0.71%
XL $34.84 0.61%
AAPL $94.02 -2.67%
FB $104.07 -5.81%
GOOG $683.57 -3.45%


Chart of I:DJI
DOW 16,204.97 -211.61 -1.29%
S&P 500 1,880.05 -35.40 -1.85%
NASDAQ 4,363.1440 -146.4150 -3.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs