The Securities and Exchange Commission approved rule changes for money-market funds this week — some good and some bad, says James Sanford, a portfolio manager for Sag Harbor Advisors.

On the good side, the SEC now requires a floating net asset value rather than a fixed $1.00 par value for the funds, he writes on CNBC.com.

"However, the other proposed change, which would allow money managers to suspend redemptions by investors or charge them fees to redeem during volatile periods, is a travesty."

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So how should investors respond to the new rules?

"Stay out of money market funds!" Sanford writes. "The few extra basis points of yield aren't worth it." You aren't guaranteed a $1 par share value or insurance from losses.

"Keep your cash in short term T-bills. . . or FDIC-guaranteed bank CDs," he says. "The yield differential isn't worth taking the capital-loss risk inherent in money-market funds." The FDIC provides the only true insurance, Sanford says.

Some money-market fund managers expressed approval for the new rules. "Our initial reaction is that the SEC has struck a reasonable balance," Nancy Prior, head of fixed-income investing at Fidelity Investments, told Bloomberg.

But Federated Investors disagrees. The SEC moved without "any evidence that instituting a floating net-asset value would do anything to eliminate runs," it said in a statement on its web site.

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