Money Market Fund Interest Rates

Hello

Rates on money market mutual funds will remain if the Fed lowers interest rates on Sept. 18. However, there may be a delay between the action of the Fed and rate cuts. Some money market mutual fund portfolio managers may set earlier deadlines for action by the Fed. If a manager of mutual fund portfolio estimates that rates will be reduced, he or she may increase the maturity of the portfolio. Thus, there may be a delay in the performance of the fund down.

Here is a link to a good article on this goal:

http://www.westga.edu/ bquest/2001/effic ~ ...


I hope this helps.

Michael A. Weiss, CFA
The editor
Investors of mutual funds
http://www.mutualfundinvestor.net

Well in the passage the market price drops some. But then he slowly gains back and is fortunately a little higher.

When the Fed moves the funds rate down, all other short-term rates will go down as well, and because money market funds invest in just such securities, the rates they pay (performance ) will also fall. However, the value of your money market fund will not fall, your actions should remain "price" at $ 1 per share. Only your future performance will be lower.