Money Fund Yields Increase
September 18, 2007
Investors who use mutual fund money markets (money funds) as part of their investing strategy will note a larger yield spread between Treasury-only money funds and money funds with a wider diversity of holdings. Funds like DWS Money Market Series Prime Reserve - Class S (5.27%, minimum $1,000), Fidelity Money Market Fund (5.27%, minimum $25,000), Harbor Money Market Fund ( 5.24%, minimum $1,000), TIAA-CREF Money Market Fund (5.23%, minimum $2,500), and Fidelity Cash Reserves (5.23%, minimum $2,500) are all offering compounded yields significantly higher than the Treasury-only funds which are yielding between 4.50% and 4.75% on average. This summer has been one of the biggest tests of the money fund industry and with a few exceptions the funds have held up very well. The funds listed above have offered yields higher than U.S. Treasury-only funds while maintaining their net asset values ($1) through a turbulent market in mortgage-securities. Investors should always review their portfolio holdings to better understand their exposure to some of the more volatile mortgage-securities, but money funds continue to perform very well.
