CMO/MBS Fund suitable for cash portion of PP?
Moderator: Global Moderator
Re: CMO/MBS Fund suitable for cash portion of PP?
That is probably OK if the Mortgages are US agency backed for your cash. As long as the fund is stable.
Re: CMO/MBS Fund suitable for cash portion of PP?
Just understand the risk. US agency backed does not always mean US govt. backed. Something guaranteeing 3.2% is taking more risk when you consider the typical T-Bill is about 0.1%! That extra 3.1% return is coming from somewhere and that is what would make me curious/concerned.mdsw wrote:The Mortgages are US agency backed and the fund itself guarantees 3.2% at the moment. It almost always guarantees something around 3%.craigr wrote: That is probably OK if the Mortgages are US agency backed for your cash. As long as the fund is stable.
Re: CMO/MBS Fund suitable for cash portion of PP?
No!mdsw wrote: Yeah I understand. But wouldn't you say that the added risk of seeking that extra 3% is relatively nullified by the fact that the 3% is guaranteed?
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Pascal
Re: CMO/MBS Fund suitable for cash portion of PP?
Guaranteed by whom?mdsw wrote:Yeah I understand. But wouldn't you say that the added risk of seeking that extra 3% is relatively nullified by the fact that the 3% is guaranteed?
There were high yield money market funds in some 529 plans that got creamed in 2008's crash for instance. The extra return was wiped out in capital losses.