Switch to Desktop Site

Even your money-market fund could be hit by Greek default

Nearly half of US mutual fund assets are invested in European banks, some of which face big losses in case of a Greek default. Banks could see their ratings downgraded after a Greek default.


Greek riot police officers throw tear gas as they chase protesters during clashes in Athens' main Syntagma square, June 15, 2011. The banner reads in Greek: 'Continuous strikes, until victory'. Hundreds of protesters clashed with riot police in central Athens Wednesday as a major anti-austerity rally degenerated into violence outside Parliament, where the struggling government was to seek support for new cutbacks to avoid a disastrous default. A Greek default could have ripple effects for investors in the United States and beyond.

Lefteris Pitarakis/AP

About these ads

Some of the safest, plain-vanilla investment accounts in the U.S. could be challenged if Greece defaults on its sovereign debt.

Forty-four percent of mutual fund assets in the U.S. are invested in the short-term debt of European banks, according to a report from Fitch.

A separate report from Moody's noted that 55 percent of those holdings are in the commercial paper of French banks, such asSociete Generale, BNP Paribas [BNP-FR 51.11 -0.19 (-0.37%) ] and Credit Agricole. French banks are some of biggest creditors to Greece, with over $53 billion in outstanding loans to the Greek government and private sector.

While fund managers have had plenty of warning of the potential of a default in Greece, many would likely still be caught off guard. Many fund managers assume that a bailout will prevent a default by Greece.


Page:   1   |   2