Fundsters in the money market side of the business may want to look at the Saturday edition of the Wall Street Journal. In the "Weekend Investor" section, Jane Kim reports on the various pressures pushing money market mutual fund yields to stay low. And the Journal notes that, according to iMoneyNet, the money market business is shrinking in terms of number fund count, from 1,857 funds on August 31, 2008 to 1,613 funds on December 31, 201. This represents a drop of more than 13 percent.

Pittsburgh-based Federated Investors has been part of that consolidation, taking over numerous money market funds over the past several years as other firms struggle under the low-yields that force them to keep fees low. Debbie Cunningham, chief investment officer at the firm, weighed in for the article, along with Crane Data chief Pete Crane, iMoneyNet managing editor Mike Krasner and ICI president Paul Schott Stevens.

The Journal cites numerous factors keeping money market yields down (now averaging just six basis points, according to Crane, down from 276 bps in March 2008): rate cuts by the Federal Reserve, new SEC rules (effectively forcing money funds to increase their portfolios' liquidity while also increasing costs of compliance), and now turmoil in the repo market. 

Edited by: Neil Anderson, Managing Editor


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