Thursday, September 18, 2008

Run On Money Market Fund: Reserve Primary Fund Lost 60% Of Its Assets To Redemptions This Week

The news on redemptions at Reserve Primary is certainly being kept low key. The only reference to it that I have seen was buried in the third paragraph of a Bloomberg story.

The Reserve Primary Fund lost more than 60 percent of its assets to redemptions this week,according to Bloomberg. Now that's a run on a money market fund.

Reserve Primary had $64 billion in assets, a 60% redemption means over $38 billion would have been pulled.

Reserve Primary announced this week that it had "Broke the buck" on its $1.00 per share net asset value because of some Lehman paper in the portfolio that was marked down to zero. It also announced that it had put a 7 day freeze on redemptions.

UPDATE: MAJOR NEW STORY: The Government Panic of September 2008

-EPJ Newsdesk

1 comment:

  1. I had a discussion with my Ferris, Bakers Watts stockbroker about this fund possibly breaking the buck in August of last year. He sort of laughed at my concern until I mentioned the Countrywide and Yankee bonds in their portfolio. He said the fund was well run and Ferris was well capitalized (before a rogue trader destroyed 1/3 their capital). I am mad at myself for being so stupid to believe any stockbroker.