Could money-market mutual funds yield LESS than zero?
*Bloomberg, by Christopher Condon, December 10, 2008
“Money-Market Fund Yields May Fall to Less Than Zero, Crane Says
Investors in money-market mutual funds that focus on U.S. Treasuries may lose money for the first time if the Federal Reserve cuts interest rates next week and yields become too small to cover expenses.
Record-low yields on government debt have already led money-market funds to waive fees to keep returns positive. If the Federal Open Markets Committee, as expected, cuts its target rate, some Treasury funds may allow returns to turn negative, said Peter Crane, president of Crane Data LLC, a money-fund research firm in Westborough, Massachusetts.
‘No one has ever paid above and beyond their interest income to be in a fund,’ Crane said. ‘But if we see another cut, we’ll likely see negative yields.'”
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