Bloomberg writes "Money Funds Get 'Micro Bailouts' as Disclosure Rules Take Effect". The article says, "Money funds are covering small losses on their investments to avoid unsettling clients when tighter U.S. rules will require them to disclose even small shortfalls. Charles Schwab Corp., based in San Francisco, spent $132 million last quarter and Baltimore's T. Rowe Price Group Inc. said it will spend $17 million this quarter to eliminate losses from securities that went sour in 2008. The deficits weren't big enough to push the funds' share prices below $1." "The reforms may usher in an era of micro-bailouts," Bloomberge quotes Peter Crane, president of Crane Data LLC, a money-fund research firm in Westborough, Massachusetts. It adds, "Starting this month, the Securities and Exchange Commission is requiring money funds to unveil a net asset value that reflects small, previously undisclosed realized and unrealized losses or gains, a figure known as a 'shadow NAV.'.... The predicament adds to woes for the industry caused by record low interest rates. Yields that average 0.08 percent for the biggest 100 taxable funds, according to Crane Data, have helped reduce assets by 14 percent this year to $2.8 trillion. Funds have also been forced to waive some fees in order to keep yields above zero. Crane estimated the industry's fee revenue will fall below $7 billion this year, down from $11 billion in 2009."
