Major Money Fund Drops NAV Below $1
September 16, 2008
The devastating week for financial companies continued today after Primary Reserve Primary Fund became the first money-market fund in 14 years to drop their net asset value below $1 after writing off $700 million of debt issued by bankrupt Lehman Brothers Holdings Inc. and experiencing large withdrawals. Primary Reserve Fund is actually the oldest money fund in the nation; but after experiencing a 60% loss in assets and dropping the price on their fund to fell to 97 cents a share the company was forced to announce that redemptions were suspended for up to a week.
Other major mutual fund companies like Vanguard, Fidelity, and Dreyfus have issued statements regarding the stability of their own mutual fund money market funds and the more limited exposure to Lehman debt in their portfolios.
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