columnist Chuck Jaffe turned his attention to money-market funds today, looking at why investors like them and the SEC's attempts to further regulate them.
Money-market funds are supposed to be boring, pain-free investments, a safe place to park cash. Shares are priced at a constant $1; any interest the fund earns that would otherwise raise the price gets shaved off and reinvested to keep the value stable. If the fund were to lose money — a situation that would typically result in the share price dropping — the fund sponsor typically steps in to make sure that the fund does not “break the buck.”
To see all of Jaffe's analysis, check out the column here
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