Making Cents: Can Money Market Funds Maintain Margin?

Despite their play-it-safe, stable reputation, money market funds pose a risk if inflation stays low. The typical fund still yields about 5%--a decent return when you consider that inflation is running at 2.5% or less. But normally, money market funds are just a shade above inflation, and many expect that they will eventually return to that pattern. And by the time they do, investors may have lost the chance to lock in some higher yields elsewhere.