Structured Investment Vehicles are Reshaping Money Market Funds

SIVs – structured investment vehicles are causing problems for many investors in money market funds today.

According to The Wall Street Journal’s Diya Gullapalli, problems with SIVs are rampant in taxable money market funds and may lead to a sharp drop in consumer confidence.

Why the concern with structured investment vehicles?

When experts see Credit Suisse Group, Janus Capital Group Inc., Northern Trust Corp. and Wells Fargo & Co. buying – or talking of buying – the assets of troubled SIVs even when doing so will likely cut into earnings, everyone takes notice.

A swell of SIV problems could result in mutual funds “breaking the buck” (meaning to fall below a dollar a share). This would shake consumer confidence to its core, and the repercussions would be felt throughout the entire financial system.

The mere possibility has spurred large firms to action. Money fund researcher Crane Data reports 12 SIV-support moves having taken place publicly already.

The bottom line? Even money market funds, once thought nearly as safe as Treasury securities, should be viewed in today’s economy as potentially high-risk investments.

Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage related investment losses.

This entry was posted on Sunday, March 16th, 2008 at 2:34 pmand is filed under Money Market & Short Term Investment Losses, Structured Investment Vehicles (SIV's). You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.