What's In Your Money Market Funds Wallet??
The Nattering One muses... when will the money market fund and completed LBO failures begin to mount? Sung to Aerosmiths "Dude Looks Like a Lady"... do the hanky skanky
When the music plays, dance the hanky skanky, click your heels 3 times and repeat the mantra... there is no spillover...
My money is safe, I'm in money market funds. Guess again, because when the fed led music stops, even money market funds better grab a chair.
Snipets from Bloomberg with alot of Nattering love sprinkled in... Aug 8th U.S. money market fund total assets reached a record high of $2.66 trillion. The only fund to ever fail...
In 1994, a fund run by Community Bankers Mutual Fund of Denver invested in securities that defaulted. Investors were paid 96 cents a share, and the fund was liquidated.
If 5% of a fund's holding is subprime debt, and in a worst-case situation that asset collapses, then the value of the fund could drop to 95 cents.
Some CDOs issue commercial paper, and brokers can then sell that paper to money market funds. In the past, CDO commercial paper rarely defaulted. Exceptions: paper issued by Enron and WorldCom.
Money market funds with total assets of $300 billion have invested in subprime debt this year. About 25% of the content of all CDOs sold last year in the U.S. was made up of securitized subprime mortgage loans.
U.S. money market funds run by Bank of America Corp., Credit Suisse Group, Fidelity Investments and Morgan Stanley held more than $6 billion of CDOs with subprime debt in June.
Bear Stearn's CDOs filled with subprime debt have been purchased by money market funds run by Invesco Plc's AIM Investment Service, Marsh & McLennan Cos.' Putnam Investments and Wells Fargo & Co.
The Credit Suisse Group Institutional Money Market Fund Prime Portfolio held 8% of its $22.8 billion of assets in commercial paper secured by subprime home loans as of June 30.
Two AIM money market funds owned $2.64 billion of CDO commercial paper that was invested in subprime debt. The debt made up 10.2% of the AIM STIT-Liquid Assets Portfolio and 4.5% of AIM STIT-STIC Prime Portfolio.
In March, Putnam Money Market Fund owned "Bear" paper amounting to 3.5% of the Putnam fund's $3.41 billion in holdings.
Wells Fargo funds also hold the subprime-backed debt. The funds' holdings of all CDO commercial paper ranged from 4.1% to 6.9% of their assets.
CDOs, laced with subprime home loan securitizations, made up 5.1% of the $11.4 billion Wells Fargo Advantage Money Market Fund as of June 30.
The biggest money market fund in the U.S., Fidelity Cash Reserves Fund, had 1.5% of its $98.2 billion assets invested in CDO commercial paper backed by subprime debt.
Vanguard Group Inc., the 2nd largest mutual fund company in the U.S....
has a policy of NEVER buying CDO commercial paper for its $90 billion in money market funds or $325 billion in fixed-income mutual funds.
Oh, by the way... according to JP Morgan: leveraged buy out groups have relied on CDO's for 60% of the loans to finance US acquistions. DOH!!
When the music plays, dance the hanky skanky, click your heels 3 times and repeat the mantra... there is no spillover...
My money is safe, I'm in money market funds. Guess again, because when the fed led music stops, even money market funds better grab a chair.
Snipets from Bloomberg with alot of Nattering love sprinkled in... Aug 8th U.S. money market fund total assets reached a record high of $2.66 trillion. The only fund to ever fail...
In 1994, a fund run by Community Bankers Mutual Fund of Denver invested in securities that defaulted. Investors were paid 96 cents a share, and the fund was liquidated.
If 5% of a fund's holding is subprime debt, and in a worst-case situation that asset collapses, then the value of the fund could drop to 95 cents.
Some CDOs issue commercial paper, and brokers can then sell that paper to money market funds. In the past, CDO commercial paper rarely defaulted. Exceptions: paper issued by Enron and WorldCom.
Money market funds with total assets of $300 billion have invested in subprime debt this year. About 25% of the content of all CDOs sold last year in the U.S. was made up of securitized subprime mortgage loans.
U.S. money market funds run by Bank of America Corp., Credit Suisse Group, Fidelity Investments and Morgan Stanley held more than $6 billion of CDOs with subprime debt in June.
Bear Stearn's CDOs filled with subprime debt have been purchased by money market funds run by Invesco Plc's AIM Investment Service, Marsh & McLennan Cos.' Putnam Investments and Wells Fargo & Co.
The Credit Suisse Group Institutional Money Market Fund Prime Portfolio held 8% of its $22.8 billion of assets in commercial paper secured by subprime home loans as of June 30.
Two AIM money market funds owned $2.64 billion of CDO commercial paper that was invested in subprime debt. The debt made up 10.2% of the AIM STIT-Liquid Assets Portfolio and 4.5% of AIM STIT-STIC Prime Portfolio.
In March, Putnam Money Market Fund owned "Bear" paper amounting to 3.5% of the Putnam fund's $3.41 billion in holdings.
Wells Fargo funds also hold the subprime-backed debt. The funds' holdings of all CDO commercial paper ranged from 4.1% to 6.9% of their assets.
CDOs, laced with subprime home loan securitizations, made up 5.1% of the $11.4 billion Wells Fargo Advantage Money Market Fund as of June 30.
The biggest money market fund in the U.S., Fidelity Cash Reserves Fund, had 1.5% of its $98.2 billion assets invested in CDO commercial paper backed by subprime debt.
Vanguard Group Inc., the 2nd largest mutual fund company in the U.S....
has a policy of NEVER buying CDO commercial paper for its $90 billion in money market funds or $325 billion in fixed-income mutual funds.
Oh, by the way... according to JP Morgan: leveraged buy out groups have relied on CDO's for 60% of the loans to finance US acquistions. DOH!!
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