Today's Wall Steet Journal writes "When Safe Places No Longer Feel So Safe", which asks, "Is anything safe??" The article says, "Just a year or so ago, it wasn't hard to spot the safest options on a typical retirement-plan investment menu. There were money-market funds, which typically aim to maintain a steady $1-a-share net asset value. There were stable-value funds, which also are designed to preserve capital and deliver smooth, steady returns. And there were short-term bond funds, which many investors saw as only slightly riskier than cash. But all of these supposedly stodgy investments have come under serious strain in the financial crisis. In September, a money-market fund that held Lehman Brothers debt fell below the sacrosanct $1 level, sparking massive withdrawals from certain money funds. In recent months, at least two stable-value funds have dished up losses to retirement-plan investors. And a number of short-term bond funds posted large declines last year as mortgage-related holdings hit the skids." On money funds, it adds, "Investors should pay attention to a money-market fund's yield. A higher yield often means higher risk. In this low-rate environment, a yield much above 1% could be a red flag, says Peter Crane, president of Crane Data LLC of Westboro, Mass., which tracks the money markets." "If you've made the decision to be in safe investments in the first place, you don't want to blow it by reaching for a little extra yield," WSJ quotes Crane.
