Wednesday, November 14, 2007

Buck Breaking

This isn't actually a money market fund, but it's pretty damn close.

Investors in a $5 billion cash management fund run by General Electric have become the latest victims of the subprime mortgage meltdown.

CNBC has confirmed that a short-term cash management fund, which attempts to keep the value of each share at one dollar ... and offer enhanced returns above money market rates, is instead offering investors just 96 cents on the dollar.

The fund is not a money market fund, which is subject to much more stringent regulations than a cash management fund.

...

In recent days, several asset managers, whose funds were infected by bad subprime paper, have injected cash into their money funds to avoid breaking the buck. You may have heard that phrase on CNBC today: It's when an asset management fund offers less than one dollar per share.