Once you look past the name on the prospectus, it's getting harder these days to distinguish one money-market mutual fund from another.
The differences in the yields these popular money-management vehicles can earn as they compete with one another have been shrinking of late as short-term interest rates have fallen.The funds will take another step toward near-generic status in June, when new Securities and Exchange Commission strictures go into effect on the investment choices they can make.
Under the rules, money funds will have to keep the average maturity of the money-market securities in their portfolios at 90 days or less and adhere to stringent limits on their holdings of corporate commercial paper that doesn't carry a top-level credit rating.
"What this does is make these funds even more similar than they were," says Steven Norwitz, a spokesman for the Baltimore investment management firm of T. Rowe Price Associates.
One logical result of this trend will be at least a modest reduction in the general level of money-fund yields at just about any stage of the up-and-down cycle of interest rates.
For one thing, funds will have less leeway to lengthen their maturities when they expect declining interest rates, or to stretch their quality standards a little, to try to earn a little extra return.
For another, their concentrated demand for top-quality investments stands to put downward pressure on the rates that entities like the U.S. Treasury and blue-chip corporations have to pay to borrow money.
Managers who run money funds point out that there are only so many elite issuers of money-market securities, and that their ranks cannot readily increase just to meet enhanced demand.
But financial observers say this prospective negative for money-fund investors is probably at least counterbalanced by an added measure of safety and stability.
In less than two decades since the organization of the first money fund, the Reserve Fund, in 1972, these funds have become a part of the foundation of the investment and savings system in this country.
With assets of about half a trillion dollars, they in fact have gained de facto standing as a modern version of the traditional bank savings account.
As safe as they may be, however, they still lack any explicit guarantee like the government insurance that covers bank deposits.
Along with the growth of money funds in size and credibility, regulators saw that the potential for a blow to confidence increased should a fund or funds run into trouble that couldn't readily be resolved.
Hence the SEC's desire to keep money-fund managers away from the temptation of gambles with either credit risk or interest-rate risk that could backfire should they guess wrong.
"Investors should note that these new standards apply only to taxable money market funds, and are intended to reaffirm the safety of such investments," notes the United Mutual Fund Selector, an investment advisory letter.
For investors who don't want to go along entirely with the money funds' added conservatism, other options are available.
Indeed, if fund sponsors see a sufficient market, they can be relied upon to offer more variations of short-term bond funds that amount to a more aggressive cousin to the money funds.
Financial advisers also observe that as money funds become more rigidly defined, it makes sense for investors to take a fresh look at how they use these funds.
"They are a very suitable investment for liquid funds," says William Brennan, a specialist in personal finance at the accounting firm Ernst & Young.