Quote:
Originally Posted by trj911
There is no such thing. A fund might contain GNMA collateral but because of the long duration (15-30 yrs) of GNMA's, it would hard if not impossible to have a money market fund of just such.
By the way, the SEC is looking into re-writing rule 2a-7.
What are you trying to do? Find one that only contains government guaranteed items?
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This is consistent with the common-sense conclusions I am taking away from what I've been reading, including 2a-7 itself. Seems as though GNMAs being comprised of mortgages, they'd have a hard time meeting the 397 day criterion in 2a-7.
Right now there's a substantial portion of cash in a Treasury-only fund. Ultra-conservative but yield at 90bp; safety costs yield. We were well over 2% prior to jumping in that fund when the industry really started spasming.
One of the powers that be said "90 bp?? We can do better and stay secure, there's this GNMA fund over at Vanguard pulling over 3%. Guaranteed funds". So I check into that and I do find an excellent GNMA bond fund over there, but NOT a money fund. The points I raised were:
-The mortgages underlying the bonds are guaranteed against default, but not fluctuations in value. The NAV can and will fluctuate
-As of yesterday, federal funds are at 150bp - those with good credit are going to refinance, which is going to dampen the values of existing GNMAs. See prior point - the NAV may take a hit.
Possibly moot, as I am not sure we are even able, according to policy, invest liquid cash in any instruments other than CDs and money markets. So then I was told, ok, go find some money funds with GNMAs. After rifling through the holdings of a dozen or two government/agency/Treasury funds, without seeing a lick of GNMA (consistent with my research), I am not sure I am getting anywhere. Can't have our cake and eat it too.