Morningstar analyst Gregory Carlson's diagnosis: Mangum's assets are dangerously concentrated in ten holdings, leaving the fund vulnerable if things go awry.
NEW YORK TIMES S.E.C. Chief Says Money Market Funds Remain Vulnerable | Money market funds are still vulnerable to runs by panicked investors, despite changes since the financial crisis, Mary L. Schapiro, the chairwoman of the Securities and Exchange Commission, is expected to tell a Senate committee on Thursday.
That would involve a mechanism for channelling funds to vulnerable countries when they suffer natural disasters related to global warming.
As a result, long-term government bond funds, particularly vulnerable to interest rate risks, posted average losses of 4.7percentt.
Regulators view the funds as vulnerable because they act like banks by taking in money and promising to return every dollar that investors put in.
The US had strongly opposed the initial "loss and damage" proposals, which would have set up a new international institution to collect and disperse funds to vulnerable countries.
Mutual funds are vulnerable to such trading because they are priced only once a day, whereas the prices of the issues in the funds change throughout the day; foreign funds are especially vulnerable because of the time difference between United States and foreign markets.
The S.E.C. has been studying money market reforms for more than a year, and is expected soon to recommend regulations that it hopes will make the funds less vulnerable to an investor run if a fund has significant losses.
WASHINGTON — Despite changes made in the wake of the financial crisis, money market funds remain vulnerable to runs by panicked investors seeking to withdraw their money, the chairman of the Securities and Exchange Commission is expected to tell a Senate committee Thursday.
However many bailouts have occurred, Ms. Schapiro is expected to strongly assert that the $2.5 trillion invested in money market funds remains vulnerable to losses that could threaten the entire financial system, according to her written testimony, which was released Wednesday.
