For an asset class with almost $3 trillion in assets, you would think that investors would pay more attention to the holdings in their money market fund. We have found little information or analysis on the holdings of money market funds. While your money market mutual fund is certainly safer than it was in 2007-’08, if you think that recent proposals by the Securities and Exchange Commission (SEC) make your fund completely safe, you have not been paying attention.
Since 1999, I have advised friends and family to invest in “treasury-only” money market funds. After reading the following three documents, I find no reason to change that recommendation. While the SEC proposals are carefully crafted and do appear to solve some of the more troubling issues, they remain incomplete. First, let’s discuss the interesting points found in the reports and then consider the unresolved issues.