Wells Fargo Overview, Strategy
Wells Fargo Advantage Funds' latest "Overview, Strategy & Outlook" discusses Europea and "governments. Dave Sylvester explains, "In the U.S., we have our own practice of homogenizing different types of sovereign debt into one monolithic market we call "governments." This market includes not only securities issued by the U.S. Treasury, but a component commonly referred to as the "agency" market, which includes a number of true U.S. government agencies, government-sponsored enterprises, and other federally sponsored or chartered entities. Agency securities play a prominent role in many money market fund portfolios. Money funds are permitted to include certain government securities in the assets used to meet their daily and weekly liquid asset targets under Securities and Exchange Commission (SEC) Rule 2a-7.... And though it's not always been the case and may not be in the future, right now all of the agencies trade at the same yield. This includes the two big housing agencies, the Federal National Mortgage Association, nicknamed Fannie Mae, and the Federal Home Loan Mortgage Corporation, or Freddie Mac, which are kept solvent only through financial support from the U.S. Treasury. However, because there is no differentiation between the various agencies under the Rule, it is especially important for money funds to note that unlimited support of Fannie Mae and Freddie Mac will end after 2012."
