Near Cash

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Here are six "near cash" funds whose charters commmit them to short term interest rate markets but without the time and other restrictions of money market funds (MMF). Events of 2008 proved that MMFs are not risk-free. Reserve Fund got caught holding very short term Lehman paper when Lehman went bankrupt and had to close. It's also no secret that Mr Volcker and many other friends of commercial banks would like to see banks resume their role as sole repository for short term rate savers or investors. Those who remember the bad old days of artificially low bank-set short term rates of the 1960's shudder to think of going back there, especially if inflation heats up. Banks, including Mr Bernancke's big bank like to pay low rates and charge the public high rates, as in commercial credit cards and Fannie Mae mortgages.

GSY is Gugenheim Enhanced Short Term Bond Fund with a fee rate of 0.28% per year and a one-year total return of 1.44%. FPNIX is FPA New Income Fund which no longer charges a load fee and whose annual fee is 0.58%  one year total return of 0.77%. VFSUX is Vanguard Short Term Investment Grade (corporate bond) Fund with a fee of 0.1% and one year total return of 1.23%. MINT is Pimco's Enhanced Short Maturity ETF with a fee of 0.35% and one year total return of 0.77%. FLTR is Market Vectors Investnent Grade Floating Rate Fund with a fee of 0.19% and one year total return of 1.61%. SCPB is SPDR Barclay Short Term Bond Fund with a fee of 0.12% and a one year total return of 1.48%.

I own FPNIX, VFSUX, and MINT but am likely to buy some or all the rest. VTAPX is Vanguard's 1-5 year TIPs fund which I also own although it has an effective duration of 2.3 years. It is down on the year but I have bought it recently.