Try the new FT.com

Last updated: September 19, 2008 7:00 pm

Money market funds explained

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

How do money market funds work and what are the consequences of the recent problems in the aftermath of a fund ‘breaking the buck’?

Money market funds are the “sacred cows” of the mutual fund world, boring, predictable and dependable. In the 2008 the total amount of money invested in money market funds soared to almost $3,400bn as investors fled from riskier products like equities. By regulation and design they invest only in top quality short term assets and are considered by retail investors to be as secure as a bank account.

However, in September 2008 the Reserve Primary Fund, the oldest in the US, on said that investors could lose money as a result of it holding debt in Lehman, which has filed for bankruptcy.

Our interactive feature explains how money market funds work and looks at the implications of the recent problems for the wider market.

Copyright The Financial Times Limited 2017. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments
SHARE THIS QUOTE