Money market funds in the US suffered an estimated $197bn of net outflows last week as confidence in their safe-haven status weakened after one fund dropped below par and others closed.
Money market funds, which in the past two years had large inflows from retail and institutional investors, were hit last week by the news that the oldest, Reserveā??s Primary fund, would return only 97 cents on the dollar. It was the first time in 14 years that a fund saw its shares falling below their par value of $1.
Investors have viewed money market funds as virtually as safe as a bank account, but the funds are not backed by any Federal guarantee.
