A money market tour: Web resource brings savvy to the money market investor

NEW YORK -- Those of you on the investing sidelines know that the stock market isn't the only source of volatility these days. If you're in safe short-term cash investments, recent Fed actions have made your returns volatile too.

Volatile -- and smaller. The return on that taxable bank money market account (MMA) parking space for your reserve cash has dwindled from a safe and steady 4.6% to just under 3%, according to Bankrate.com. And further Fed rate cuts may drop rates some more.

At the same time, the range of returns among MMAs is growing as interest rates have become more volatile and as MMA products have proliferated. Indeed, domestic MMA returns can vary by as much as 2 percentage points or more from one fund to the next. Throw so-called "offshore" funds into the mix and the range can be even wider.

Gone are the days where your broker had a couple of choices for your "sweep" account, and that was it. Now there are hundreds of choices in four basic segments: traditional taxable, tax-free, government and offshore. They come from providers ranging from your staid local bank to the "Rabo Sterling Equity Elite" British-pound fund yielding 6.01%.

So how do you find the fund that's right for you? It's worth at least a 15-minute stop at a money market portal called iMoneyNet.

Bringing MMAs center stage

With roots in the institutional space, iMoneyNet now offers a full suite of investment information and analysis for so-called "retail" money market funds.
You can get information about individual funds, see which funds rank the highest for returns and learn about fund strategies, risks, and performance. You can also get the "bigger picture" on money market investing strategies.

Specific features:

• "Top Funds" lists. Find the top yielding funds in each segment mentioned above, including "prime" and "largest" funds within the "traditional" category.
• Money fund analyzer. For the cost of a registration and login, get access to analysis for specific MMAs, including yields, average maturities, fees, risk levels and minimum investment amounts.
• Monthly reports. Generally free for all but the most recent month, these pdf documents share the latest news and strategies for different kinds of MMAs. "Money Market Insight" and "Offshore Money Fund Report" are good examples.
• MMA investment trends. From published reports and press releases to the Wall Street Journal and other outlets, iMoneyNet gives a view of the total investment and recent trends in the MMA asset class. The most recent free report shows the largest 12-month gain in MMA assets in the seven years since 2000 -- more than $700 billion to some $2.813 trillion across all fund types. Interesting. Money off the table, but ready to be reinvested when business conditions improve? A good leading stock market indicator? Perhaps. Such information can help all investors, not just those with substantial money market fund holdings. Visit the site.

Not under the umbrella

If you're an MMA investor, you're most likely on safe investing ground. But remember: MMAs are not covered by deposit or brokerage insurance. They are considered an investment company or mutual fund, not a bank deposit -- even if your MMA is from a bank.

And of course, offshore MMAs expose you to currency risk -- but also the rewards of parking your funds in a stronger currency. Play carefully.

Knowledge is power

No matter what asset class you invest in these days, you need to be informed and stay informed. There are other resources, but this is the best "one stop shop" I've found for MMA investors.

If that group includes you, take 15 minutes to check it out.

Peter Sander contributed to this article.