Investors pulled $80.7 billion from taxable money-market funds in the week that ended Tuesday, driven by $39.6 billion in withdrawals from the Reserve Primary Fund, which became the first fund to expose investors to losses in 14 years.
Total assets in U.S. money-market mutual funds fell 2.5 percent to $3.45 trillion, according to Money Fund Report, a Westborough, Mass.-based newsletter.
Reserve Primary, which held $785 million in debt issued by bankrupt Lehman Brothers Holdings Inc., lost more than 60 percent of its assets to redemptions Monday and Tuesday, causing its assets to fall to 97 cents a share. It was only the second fund, and the first since 1994, to “break the buck,” meaning its net asset value fell below the $1-a- share price paid by investors.
Institutional investors withdrew $119 billion from prime funds, which can invest in debt issued by companies. They deposited $33 billion with taxable government funds, which invest in Treasurys and government- agency debt.
Retail investors were net depositors, pouring $1.79 billion into prime funds and $3.7 billion into taxable government funds.
Lehman, once the fourth-largest U.S. investment bank, filed for Chapter 11 bankruptcy protection Monday.
