Is it possbile that non FDIC insured money market funds will lose money due to the recession?
whether the fund is FDIC or not has nothing to do with its performance nor its ability to go below the $1NAV. FDIC means simple that the fed insured the funds up to $100K. If you want to know if your Money Market is at risk, 1) ensure that it has a $1 NAV (net Asset Value) 2) ask the fund manager for the latest portfolio positions and see if they have any CDO or subprime exposure (and therefore they will be an enhanced money market). Money Market funds are on a 30 days rolling schedule meaning that they can not invest in securities that exceed 6 to 8 weeks, they are build so that the bank will imply a $1NAV guarantuee. If your money market is backed by a big bank or a big institutional investor (i.e the Fidelitys’ of the world), the likelyhood that they break the $1NAV is very remote as the bank will probably step up and fill the difference.
