Fidelity Investments has seven taxable money market funds with exposure to AIG securities, amounting to between 0.17% and 0.54% of portfolio value, according to a Fidelity statement.
Fidelity is confident that these holdings in securities of two American International Group units will pay full principal at maturity, the statement said.
The AIG exposure of Fidelity funds is in securities of ASIF Global Funding and International Lease Finance Corp. ASIF Global Funding is a regulated funding insurance subsidiary. International Lease Finance Corp. is a profitable global aircraft finance subsidiary that has enjoyed strong financial results, the Fidelity statement said.
Fidelity has been proactive in keeping our money market funds safe and in protecting the $1.00 net asset value, which has always been our number 1 objective in managing these funds, the statement said.
The funds have no exposure to Lehman Brothers Holdings Inc. or Washington Mutual Inc., the statement said.
Vanguard Groups largest money market fund, the taxable Prime Money Market Fund, which had $106.3 billion as of Aug. 31, has no exposure to securities issued by AIG, Lehman Brothers or other securities dealers, according to a statement today from the mutual fund company.
Don Phillips, managing director at Morningstar, said a money market fund falling below the $1 per share net asset value as occurred Tuesday with the Reserve Primary Fund is an unpleasant but survival event for investors, although it could cost them six months or a years worth of earnings. But for the asset management company, it would soil its reputation, he said.
None of the 525 money market funds rated by Standard & Poors is affected by exposure to Lehman, according to an S&P statement. Their exposure to AIG is not out of the ordinary, Peter Rizzo, S&P senior director, said in an interview, although he said he couldnt disclose details. The majority of rated funds stopped investing in Lehman prior to Lehmans bankruptcy filing, and many others were rolling overnight (or one-day) (repurchase agreements) that were paid in full Sept. 15, the statement said. The remaining rated funds that held Lehman paper either had their exposures purchased out by their parent companies or are in the process of obtaining credit support agreements.