Mutual Fund Company Bailouts Don’t Stop Increased Investor Inflows into Money Funds

Percent Change in Total Net Assets in Mutual Funds from January to February:

Stock Funds -1.2%
Hybrid Funds -1.2%
Taxable Money Funds +0.8%
Municipal Bond Funds -4.6%
Taxable Money Market Funds +3.9%
Tax-Free Money Market Funds -2.3%

The biggest percent increase in mutual fund assets was in taxable money market funds which are at record levels according to data recently released by the Investment Company Institutite.

The increase in investments in taxable money market funds come despite the continued reports of losses absorbed by parent companies in their moeny funds. The companies which have recorded losses include:

Lehman Brothers - $300 million loss recorded in 1st quarter 2008 after absorbing $1.8 billion in assets from the books of their money funds

Credit Suisse Group - a $780 million charge was absorbed to prevent money fund losses

Bank of America - closed a $12 billion enhanced money fund on fund instability

Legg Mason Inc. - agreed to provide as much as $400 million to bail out an institutional money market fund from potential losses on debt issued by structured investment vehicles.

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