At the Morningstar Investment Conference held in Chicago last week, I learned that on about 300 instances, asset managers had to step in, voluntarily, to prop up their money market funds since the 1970s. Like auction rate securities,get complacent. Remember: money markets are mutual funds.
The Wall Street Journal reports today that Moody's Investors Service downgraded debt securities issued by "38 closed-end mutual funds last week could ripple across financial , affecting a broad swath of municipal-bond and money-market-mutual-fund managers, analysts said." Guess who often buys variable-rate demand preferred shares? Yup, money market funds.