22 September 2008

TDAmeritrade Freezing All Reserve Money Market Funds Including "Treasury Funds?"

Read from a usually responsible poster on a financial web site here. here.

Most of my swept cash at TDAMeritrade has been frozen, and removed from funds available for trading.

The Treasury Money Market Fund that was my swept funds destination apparently is a Reserve Fund, the family which has been in the news. As nearly as I can figure, it had zero exposure to Lehman, but apparently the big review underway has frozen all Reserve Funds until review is complete.

How can a Treasury fund have any exposure to Lehman?? Then why would they freeze it and put it under review???

Someone has suggested that this is because of 'heavy redemptions' and/or a mutual support agreements among fund families.

We'd like to believe that this will turn out to be a mere inconvenience and will probably work out all right in the end.

But the more general lesson here perhaps is that you might think you own Treasuries, gold, silver, oil, forex or whatever through a fund, but at the end of the day you own the fund, and have only a claim on the asset or instrument of your intentions itself.