Coby, The answer to your question is: not any more. There was a time, 1979-1981 (I remember the dates because I was at Waddell & Reed, managers of The United Funds at the time and it was a big deal then) when money market funds had to hold reserves at a Fed Bank. The banks, somewhat fairly, IMHO, complained that they could not compete with fund money market portfolios due to the reserve requirement, thus causing an outflow from their accounts. As usual, the Investment Co. Institute also had pet Congressmen, so they arrived at a compromise that nobody liked. Existing money funds were grandfathered without reserves but could not accept new accounts. I can't remember if they could accept additional purchases from current shareholders.
So, we ended up with United Cash Reserves I and United Cash Reserves II.
Then, a few months later, and I am fuzzy on what happened as I was paying attention to something else at the time, the reserve requirements disappeared. The banks discovered short term, high yield CDs. A 1 month CD is not a demand deposit. So, they stopped their whining and the fund cos. merged all the old and new money funds together again.
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