Warning from Motley Fool Poster Polymermom: "Check Your 401"

Polymermom is a regular poster on Motley Fool's "Misheldo" board. Since many members of markettraders.com are not members of Fool, I am reprinting her short post here:

Always check a new 401k fund ASAP!

Earlier this year I received a note saying the Core Bond Fund in my 401k was changing to a new bond fund this year. They nicely transferred the old holdings to the new fund without any cause for action on my part.

The return looked impressive: ~4.5% vs. ~1.6%. Both were int. term (2.5-5 yrs duration).

They finally got around to posting the new fund's top 10 holdings and per cent asset categories. The new fund is almost 37% invested in mortgage securities. The old was only a tad over 1%.

So I moved my holdings to a money market fund from the new bond fund today. Imagine my surprise when the value of the fund had dropped almost 13% from Friday to today!

The HR analysts were chasing yields without a thought as to risk<sigh>. I wonder how many will even realize what is happening...

http://boards.fool.com/Message.asp?mid=25250558

"The HR analysts were chasing yields without a thought as to risk<sigh>. " 

Either that or they are using other peoples money to help bail their buddies out of lost cause positions. 

I wonder what % of MMF's are carrying really toxic repackaged crapola?
Anyone have any links?

Also, Am I paranoid to worry about the overall solvency of the big Mutual fund companies?

Good post. Anyone tho thinks money funds contain money should look at the security list of the money funds they own. In 2001 I did just that and was amazed to find all kinds of financial crap in the MF's. At that time gold was not on the horizon but that is where I went, and as they say the rest is history. The right kind. Your money can be history too, but the wrong kind, if you do not check everything!

Sorry, I wasn't clear.  The 13% drop was in the bond fund - not the MMF.