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The mutual fund industry never looks worse than when you consider the money market fund.

Yes, these fossils are still home to billions of dollars in investments from retail investors. A reminder of this sad truth came recently in an e-mail from investor advocate Ken Kivenko. The subject line read: "The money market fund from hell."

Indeed. The fund that caught Mr. Kivenko's eye has a management expense ratio of 0.76 per cent and an annualized 10-year return of 0.72 per cent. In 2016, this fund delivered a gain of 0.06 per cent. In no way is this fund unique in its dismalness. The category average return was an annualized gain of 0.53 per cent for the past 10 years, and a 2016 gain of 0.19 per cent.

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Money market funds are a relic from the age of high interest rates. They hold short-term debt that companies and governments issue to fund their operations. The money market fund from hell holds notes issued by the likes of the big banks, a couple of pipeline companies and the provinces of Ontario and Alberta.

If rates ever spike higher, money market funds would become an interesting option again. But even after two small rate increases over the summer, they remain largely inert.

It's a knock on both the fund industry and advisers that billions of dollars still sit in money market funds. If advisers had to work to a best interest standard, not a dollar would sit in these products. Not when they're charging fees to investors that exceed returns.

As for fund companies, they should have long ago moved investors into investment savings accounts where current returns are running between 0.75 and 0.95 per cent. An investment savings account trades like a mutual fund, but operates like a savings account. You get a specified yield based on market rates, no fees to buy or sell and the benefit of deposit insurance.

Today's money market funds are the mutual fund category from hell. They're an embarrassment to the entire fund industry, and to the advisers who keep clients in these products.

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