Monday, August 23, 2010

Are Money Markets a Safe Harbor?

David Campbell emails:
Thanks for your excellent article. Could you comment briefly on the relative safety of Money Market funds as a safe harbor for parking stock and mutual fund proceeds?
For money you are keeping as liquid, money markets funds are a very good place to hold funds. There is no question that an implied govenment safety net exists under any of the larger funds. The 26 money market funds that the Fed just announced they will be doing business with, if they decide to do draining activities. are the ones the Fed is most likely to protect under all conditions. For the best protection, use one of them:

BofA Cash Reserves

BlackRock Liquidity Funds: TempFund

Schwab Cash Reserves

Schwab Value Advantage Money Fund

Deutsche Cash Management Master Portfolio

Dreyfus Cash Management Fund

Dreyfus Government Cash Management Fund

Dreyfus Institutional Cash Advantage Fund

Federated Government Obligations Fund

Federated Prime Obligations Fund

Fidelity Cash Reserves

Fidelity Institutional Prime Money Market Portfolio

Fidelity Institutional Money Market Portfolio

Fidelity Institutional Government Portfolio

First American Prime Obligations Fund

Goldman Sachs Financial Square Government Fund

Goldman Sachs Financial Square Money Market Fund

Goldman Sachs Financial Square Prime Obligations Fund

AIM STIT Liquid Assets Portfolio

JPMorgan Prime Money Market Fund

JPMorgan US Government Money Market Fund

Western Asset/Liquid Reserves Portfolio

Vanguard Market Liquidity Fund

Vanguard Prime Money Market Fund

Wells Fargo Advantage Government Money Market Fund

Wells Fargo Advantage Heritage Money Market Fund

I hasten to add that all your money shouldn't be in money market funds. This is a very tricky period and the possibility exists that there might be a short-term dip in gold, but that doesn't mean you don't need to hold gold as protection against future inflation that could heat up on very short notice.

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