Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Support MFO
Donate through PayPal
Schwab, First Republic, Zion, bank loan and preferred funds bloodbath
Morning @msf I'm on the go this morning (away from the house,not enough time) and not familiar with Schwab MMFT's. I will presume that the outflows you mention are due to the non-Treasury holdings being a larger percentage vs their other MMKT's that are 'more' Treasury oriented, yes? Thank you.
I will presume that the outflows you mention are due to the non-Treasury holdings being a larger percentage vs their other MMKT's that are 'more' Treasury oriented, yes?
Yup. Flight to quality. Personally I don't see a direct connection between banks being at risk (though not failing, and in fact being propped up by the FDIC) and corporate defaults substantial enough that prime funds break a buck.
Seems more like herd mentality to me - the same behavioral phenomenon that leads to runs on solvent banks that in turn can cause the failures that people are afraid of.
Comments
I'm on the go this morning (away from the house,not enough time) and not familiar with Schwab MMFT's. I will presume that the outflows you mention are due to the non-Treasury holdings being a larger percentage vs their other MMKT's that are 'more' Treasury oriented, yes?
Thank you.
Yup. Flight to quality. Personally I don't see a direct connection between banks being at risk (though not failing, and in fact being propped up by the FDIC) and corporate defaults substantial enough that prime funds break a buck.
Seems more like herd mentality to me - the same behavioral phenomenon that leads to runs on solvent banks that in turn can cause the failures that people are afraid of.
See prisoner's dilemma.