US money market funds continue to increase their use of secured lending for investments in Europe. The amount of repo lending in their portfolios has been growing.
 |
| Source: Fitch |
This is good news from the perspective of the safety of US money funds, but if you need some place to park your cash (that is outside a bank), be prepared to get close to zero return. Between the the near-zero rates on repo and zero rates on treasury bills, there isn't much left after fees. As an example the Fidelity Money Market Fund (ticker: SPRXX) has made less than 1 basis point for the whole year. That's right, if you deposited $100,000 with SPRXX on 2/22/11 and took it out on 2/22/12, you would have made ten dollars ($9.50 to be exact).
 |
| SPRXX total return (Bloomberg) |
SoberLook.com
