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Trending: Top 3 California Municipal Bond Funds
Justin Kuepper
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Municipal bonds have been a safe haven within fixed income markets that have...
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The ESF allows the Treasury to convert special drawing rights funds (SDRs) into dollars by exchanging them with the Federal Reserve. An SDR is an international reserve asset established by the International Monetary Fund. The ESF is used as a backstop to cover any losses the Fed might incur through its new lending programs that target the securities, credit, and foreign exchange markets.
Learn more about mutual funds here.
On October 21, 2008, the Fed announced the Money Market Investor Funding Facility (MMIFF) and pledged to lend up to $540 billion. The MMIFF was established about a month after a money market fund called the Reserve Fund ‘broke the buck,’ meaning that the value of its shares had plunged below par value of $1. The Reserve Fund broke the buck after Lehman Brothers filed for bankruptcy on September 15, 2008, exposing investors to crippling losses.
Check our Money Market Funds center to keep up to date with happenings in the money market world.
In response, the Treasury announced it would finance any losses using the ESF mechanism. The ESF guaranteed deposits and protected the value of the dollar.
Looking back, one can argue that the Fed’s post-crisis programs were successful because they brought in more money than was paid out by the government. Most of the Treasury and Federal Reserve programs have zero principal outstanding. That means net income exceeded the amount doled out by the government.
Use the Mutual Funds Screener to find the funds that meet your investment criteria.
Although these measures were considered necessary to stabilize the financial system in the wake of the COVID-19 crisis, they carry significant risks. For starters, money market funds own about $325 billion of the $1 trillion commercial paper market, which has been under considerable stress as companies continue to rely on their revolving credit lines to shore up cash flow.
For many investors, this conjures up images of another ‘break the buck’ scenario as Lehman Brothers in 2008. Although post-crisis legislation prevents this, money market funds exposed to commercial paper are still vulnerable to a run on assets. As a result, there has been significant outflow from prime funds as investors continue to be cognizant of the risk.
Don’t forget to click here to see the 2016 reforms that drastically changed how money market funds operate.
Be sure to check our News section to keep track of the latest updates from the mutual fund industry.
Receive email updates about best performers, news, CE accredited webcasts and more.
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The ESF allows the Treasury to convert special drawing rights funds (SDRs) into dollars by exchanging them with the Federal Reserve. An SDR is an international reserve asset established by the International Monetary Fund. The ESF is used as a backstop to cover any losses the Fed might incur through its new lending programs that target the securities, credit, and foreign exchange markets.
Learn more about mutual funds here.
On October 21, 2008, the Fed announced the Money Market Investor Funding Facility (MMIFF) and pledged to lend up to $540 billion. The MMIFF was established about a month after a money market fund called the Reserve Fund ‘broke the buck,’ meaning that the value of its shares had plunged below par value of $1. The Reserve Fund broke the buck after Lehman Brothers filed for bankruptcy on September 15, 2008, exposing investors to crippling losses.
Check our Money Market Funds center to keep up to date with happenings in the money market world.
In response, the Treasury announced it would finance any losses using the ESF mechanism. The ESF guaranteed deposits and protected the value of the dollar.
Looking back, one can argue that the Fed’s post-crisis programs were successful because they brought in more money than was paid out by the government. Most of the Treasury and Federal Reserve programs have zero principal outstanding. That means net income exceeded the amount doled out by the government.
Use the Mutual Funds Screener to find the funds that meet your investment criteria.
Although these measures were considered necessary to stabilize the financial system in the wake of the COVID-19 crisis, they carry significant risks. For starters, money market funds own about $325 billion of the $1 trillion commercial paper market, which has been under considerable stress as companies continue to rely on their revolving credit lines to shore up cash flow.
For many investors, this conjures up images of another ‘break the buck’ scenario as Lehman Brothers in 2008. Although post-crisis legislation prevents this, money market funds exposed to commercial paper are still vulnerable to a run on assets. As a result, there has been significant outflow from prime funds as investors continue to be cognizant of the risk.
Don’t forget to click here to see the 2016 reforms that drastically changed how money market funds operate.
Be sure to check our News section to keep track of the latest updates from the mutual fund industry.
Receive email updates about best performers, news, CE accredited webcasts and more.
News
Justin Kuepper
|
Municipal bonds have been a safe haven within fixed income markets that have...
Kristan Wojnar, RCC™
|
We are exploring the topics of virtual nonverbal communication, getting your blogs to...
Justin Kuepper
|
Let’s take a look at a few key pieces of advice to stop...
Find out why $30 trillon is invested in mutual funds.
Download our free report
Find out why $30 trillon is invested in mutual funds.
Download our free report
Find out why $30 trillon is invested in mutual funds.
Mutual Fund Education
Justin Kuepper
|
Let's take a closer look at how ESG investments have outperformed during the...
Mutual Fund Education
Daniel Cross
|
While CITs and mutual funds share many similarities, there are some key differences...
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Sam Bourgi
|
The phrase ‘bear market’ has been thrown around a lot lately, but it...