The influx of money into Treasuries, combined with record-low interest rates, has driven the yields of Treasury money market funds so low that rather than risk breaking the buck, many funds are now turning away new money, MarketWatch reports.

Even eliminating their management fees, the funds are in danger of falling below a $1 net asset value, incurring investors' anger, much like what happened with Reserve Funds' Primary Fund.

Just last week, Vanguard closed its Vanguard Admiral Treasury Money Market and Vanguard Treasury Money Market funds, and PIMCO delayed the launch of a Treasury money market fund.

Similarly, in December, JPMorgan Funds and Fidelity Investments closed their Treasury money market funds to new investors. And Janus just announced it is exiting the institutional money market fund business.

As of Dec. 31, the average yield on Treasury funds was 15 basis points, compared with 2.71% a year earlier. Thirty-day Treasury bills are yielding zero. As a result, some investors are moving into short-term and intermediate bond funds along with government agency debt.

Jefferies & Co. issued a report saying it is likely more asset managers will exit the money market and cash management business due to little to zero profits. As a result, only those with a "significant footprint" will survive. "Consolidation would likely ensure as capital requirements would drive smaller players out, and yields would be driven down as only the highest-quality assets would be viable investment options," Jefferies said.

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