Low Rates Hit Money-Market Funds
Money-market mutual funds, those havens of safety for investors during tumultuous times, are facing their own pressures as interest rates continue to decline.</br></br>The funds, which historically aimed to provide higher yields than bank deposits without risk of losses, are waiving fees and consolidating -- or closing their doors altogether.</br></br>The drop Thursday in the yield on the 10-year Treasury to below 2% in intraday trading provided fresh bad news for the funds.</br></br>Money-market funds once were profit machines, collecting $13 billion in fees at their peak in 2008. But they have seen their revenues shrivel by 65% over the past three years as short-term interest rates have fallen to near zero.</br></br>The Federal Reserve's announcement last week that it would likely leave rates untouched for the next two years erased hopes for improvement anytime soon, say analysts.