Broke The Buck

Filed Under » , ,
Dictionary Says

Definition of 'Broke The Buck'

When a money market mutual fund's net asset value (NAV) drops below $1 per share. Money market funds aren't federally insured like bank deposits; therefore, fund assets have an implied promise to preserve capital at all costs and preserve the $1 floor on share prices. These funds are regulated by the Securities and Exchange Commission and Rule 2a-7 restricts what they can invest in based on credit quality and maturities with the hope of ensuring principal stability.
Investopedia Says

Investopedia explains 'Broke The Buck'

Breaking the buck is an extremely rare event that money market fund managers always want to avoid, but it can occur if the underlying fund investments (which are generally assumed to be completely safe) significantly drop in value. This can happen if the underlying investments suffer large losses, such as defaults or strong moves in interest rates. Several funds reached or approached this critical point (from an investor faith standpoint) during the credit crisis that occurred as a result of a drop in mortgage-related assets beginning in 2007.

Articles Of Interest

  1.

    Why Money Market Funds Break The Buck

    These funds are noted for their safety in a rough market. Read on to find out why.

  2. Money Market Mutual Funds: A Better Savings Account

    An good alternative to the traditional savings account is the money market mutual fund. It's easy, safe and has better returns.

  3. Do Money-Market Funds Pay?

    This investment provides security, but its returns may not be adequate for long-term investors.

  4. Breaking The Buck: Why Low Risk Is Not Risk-Free

    Money market funds have been assumed to be safe investments, and they are - but only to a point.

  5. The Money Market: A Look Back

    Learn how past inflationary periods can predict future real rates of return for cash investments.

  6. The Money Market

    If your investments in the stock market are keeping you from sleeping at night, it's time to learn about the safer alternatives in the money market.

  7. Basic Investment Objectives

    You might know about different asset types, but do you know how each type contributes to a particular goal?

  8. Exploring The Current Account In The Balance Of Payments

    Learn how a country's current account balance reflects the country's economic health.

  9. Choose A Fund With A Winning Manager

    We break down the key components of analyzing a fund manager's performance so you can find a winner.

  10. Taking Shots At CAPM

    Find out why many investors think the capital asset pricing model is full of holes.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Wanton Disregard

    A standard of severe negligence. Wanton disregard is a very serious accusation that indicates that a person behaved extremely recklessly.

  2. Ultra ETF

    A class of exchange-traded funds (ETF) that employs leverage in an effort to achieve double the return of a set benchmark.

  3. Toehold Purchase

    A purchase of less than 5% of a target company's outstanding stockmade by an acquiring company. A toehold purchase of just under 5%, while not a significant stake in a firm, allows the shareholders a "toe-holds" grip on the company and its decision making.

  4. Samurai Bond

    A yen-denominated bond issued in Tokyo by a non-Japanese company and subject to Japanese regulations.

  5. Chartalism

    A non-mainstream theory of money that emphasizes the impact of government policies and activities on the value of money.

  6. Dead Presidents

    Slang referring to U.S. paper currency. Dead presidents can refer to any unit of currency, but most often refers to George Washington, whose picture is on the $1 bill.
Trading Center