Measure yield on money market fund

Dear Mr Tan,

It seems those who bought the above at $1.065 in May 07 are now getting a very bad yield of less than 1 % annualised, which is much worse than even short term (1 to 3 mth) Bank Fixed Deposit rates for amounts >$50K.

The trend (over 30 to 40 days) worsen in June 07. Is the duration enough to make any judgement? Should they hold or cut their losses (relative to FD) ?

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REPLY:

You should measure the yield over 1 OR 2 months, and not just on a few past days (as it may be affected by temporary fluctuations.

I believe that the current yield is about 2% per annum (based on the underlying investments). It is better to stay invested in the money market fund (unless you have specific use for the money).