Dow Jones writes "Money Market Funds Struggle As Fed Keeps Rates Near Zero", The article says, "Money market funds, their pre-recession glory days well behind them, have a new cloud over their future: how to stay in business another two years when their investors know there's no hope for profits. The funds lost any chance of making money before 2013 when the Federal Reserve said last week it would keep interest rates -- which fuel returns on the low-risk assets the funds must purchase -- near zero for at least another two years. Many small funds have already exhausted emergency measures like waiving management fees just to survive since the Fed all-but eliminated interest rates in 2009. Those funds that are out of options will likely fold, though larger funds should still be able to draw investors looking to hold nearly risk-free assets, analysts tracking the money market sector say. The number of money funds in operation has already dropped to 652 at the end of 2010 from 805 at the end of 2007, according to data from the Investment Company Institute, a national association of U.S. investment companies." The article [mis]quotes Peter Crane, president of Crane Data, a research firm that tracks money market funds, "It was [may be] the last straw for smaller players." The piece adds, "The one card the funds have left is that they're safe. Even funds that won't return a penny until at least 2013 can all-but guarantee that investors won't lose anything more than management fees. That's enough to lure investors worried about the risk posed by the stock market or currencies, which have proven volatile this year amid an uncertain economic outlook."
