Money Market ETF Not as Safe as it Appears

Updated from Nov. 21.

PowerShares has come out with an exchange-traded fund designed to act like a tax-free money market fund, but it's not quite the low-risk investment it appears to be.

The VRDO Tax-Free Weekly Portfolio (PVI Quote) tracks the performance of a pool of variable-rate demand obligations, or VRDOs, which are long-term, fixed-rate municipal bonds that act like short-term floating-rate notes.

They are popular with money market funds because they yield slightly more than some other short-term instruments, like Treasury bills and certificates of deposit, and have widely been perceived as safe. ...