How to tell whether to move out of your money market fund

Recently I have posted about the problems facing some money market funds. Most people think of them as safe places to park the money they really need to let them sleep at night. But that thinking is an illusion -- that's because money market funds are not guaranteed by any government body as bank deposits under $100,000 are.

It would be nice if the SEC would offer a public information campaign that listed which money market funds are likely to lose money and which are safe. While the government has no problem telling us which TV programs are safe and which aren't, when it comes to your money market fund, you are on your own. The government wants to "let the free market work."

Here's how you can protect yourself:

• Go online and find the prospectus for your money market fund. As an example, here's the link to the prospectus for the Columbia Money Market Reserves.
• Look at the list of investments for assets that do not look like government securities. Government securities have names like U.S. Treasury Bill. In the case of Columbia Money Market Reserves, the prospectus has a convenient table -- which should flash a warning that could cost you money. Specifically, on Page 10 there is a note (a) which lists $604 million worth of "illiquid securities" including $175 million worth from Cheyne Finance.