Investors in this one fund still have 97 percent of their investment.
"Nobody likes to lose even 3 percent, but gee the losses are a whole lot smaller than if you had invested in the common stock of these companies that had gone bust," he said.
Money market funds aim at having a higher yield than regular savings accounts but are much more conservative than other mutual funds or stocks. Generally, the riskier an investment the larger the gain or loss.
As for the Reserve Primary Fund, White said: "They reached for yield and got burned."
White said large mutual fund companies like Vanguard or Fidelity would do everything in their power to avoid letting their money market accounts lose value.
"They could well decide that it is worth it for us to sacrifice some profits to subsidize some loss we might have because our brand-name reputation is so important," he said.
In a message to investors today, Vanguard said that all of the investments in its money markets "are closely examined" by its "highly skilled and experienced credit analysts." It also noted that one of its funds has no exposure to types of investments used by dealers including Lehman Brothers and does not include any AIG stock.
Fidelity said on its Web site: "We can state unequivocally that Fidelity's money market funds and accounts continue to provide security and safety for our customers' cash investments."
The company said it is "our #1 objective" to keep the fund's value above $1.
Fidelity spokesman Vin Loporchio said the message was posted because the company wanted to be proactive in reaching customers.
"Obviously this week has been out of the ordinary," he said.
Fidelity is the country's largest mutual fund company and had $432.5 billion in money market funds at the end of August.
Deborah Cunningham, chief investment officer of taxable money markets for Federated Investors, said she didn't see any reason for investors to panic.
When choosing a fund, she said, see if it fits with the company's core business or if it has grown out as a new side business.
"This is an industry that has experienced tremendous amounts of safety and liquidity," she said. "This is a single aberration, but nothing more than that."