Is Your Money Market Safe? – Part II

The article from CNNMoney.com dovetails nicely with yesterday’s post on money market accounts. Text in bold is my emphasis.

Institutional investors cashed out about $600 million from General Electric Co.'s GE Asset Management fund amid worries about potential losses due to the troubled subprime mortgage markets, a spokesman said Thursday.

GE Asset Management Trust's Enhanced Cash Fund, a short-term bond fund, returned money to investors at 96 cents on the dollar, spokesman Chris Linehan said.

The short-term bond fund now holds $5 billion following the withdrawals of about 10 non-GE investors, he said. The withdrawals are "not significant to the viability of the fund," Linehan said.
The remaining assets are part of a $60 billion GE U.S. pension fund for 530,000 active employees, vested former employees and retirees and their beneficiaries.

Linehan said the losses were from mortgage-backed securities, including those linked to subprime home loans. GE has not disclosed how much the fund has invested in mortgage-backed securities.

The net asset value began declining in the summer. Investors were aware that the fund would "not necessarily always maintain" a $1 net asset value, Linehan said.

The losses in the bond fund raised concerns among investors that the impact on credit markets could spread and hurt small investors.