Money Market

When a money market mutual fund's net asset value (NAV) drops below $1 per share. Money market funds aren't federally insured like bank deposits; therefore, fund assets have an implied promise to preserve capital at all costs and preserve the $1 floor on share prices. These funds are regulated by the Securities and Exchange Commission and Rule 2a-7 restricts what they can invest in based on credit quality and maturities with the hope of ensuring principal stability.

Breaking the buck is an extremely rare event that money market fund managers always want to avoid, but it can occur if the underlying fund investments (which are generally assumed to be completely safe) significantly drop in value. This can happen if the underlying investments suffer large losses, such as defaults or strong moves in interest rates. Several funds reached or approached this critical point (from an investor faith standpoint) during the credit crisis that occurred as a result of a drop in mortgage-related assets beginning in 2007.

the Reserve Primary Fund, a money market mutual fund whose assets have fallen 65 percent in recent weeks, fell below $1 a share in net asset value due to losses on debt issued to Lehman Brothers.

It's the oldest money market funds in the United States. Money market funds aren't supposed to lose money, Primary Fund from Reserve on Tuesday 16 Sept 2008, saw its holdings fall below its total deposits, a condition known as "breaking the buck" that hasn't happened to a money market fund since 1994, Money market funds are supposed to be conservatively invested and almost as safe as cash.