Do Money Market Funds Need A Plus?
“What’s wrong with a higher yielding money market plus fund?” he asked. “Nothing,” I said. “It’s the ‘plus’ that bothers me.” As a young man starting out on Wall Street, I confess I learned many lessons the hard way. One is that every financial product with a plus has a corresponding minus. The bigger the plus, the bigger the potential minus. • You want to own junk bonds instead of high-grade corporates? Expect hair-raising volatility – and occasional defaults – from time to time. • You want to own stocks instead of bonds? Good idea. But, remember, the trade-off is likely to be occasional sleepless nights. • You want the even higher potential returns available in companies headquartered in Brazil, India or China? Fine. But expect to go off Niagara Falls from time to time. That’s just the nature of emerging market investing. Of course, most people don’t expect too many thrills and chills in a “money market plus.” This year, however, Halloween arrived early. Friday’s Wall Street Journal
