Incredulous investors watching in horror as Wall Street seemingly crumbles around them must be asking themselves, “What's next?”

How about money market funds?

Well, not so fast.

Money market mutual funds are widely regarded as one of the safest investment vehicles around because they invest in a mix of short-term interest bearing products such as certificates of deposit and various Treasury securities.

But on Tuesday, a money market fund called Reserve Primary Fund “broke the buck,” just the second time in the 35-year history of money market mutual funds that a fund had seen its shares fall below $1.

News of the rarity pushed up demand for the safest of all investments--Treasury bills.

With everything else happening on Wall Street, the notion that even money market mutual funds are no longer safe is a scary prospect indeed.

Peter Crane, president of Crane Data, the pre-eminent source on all things money market mutual funds, put the situation into perspective in an interview with FOXBusiness.com.

The situation with Reserve Primary Fund “appears to be an anomaly,” said Crane.

Make no mistake--there’s cause for concern because money market mutual funds are not supposed to break the buck, he added. Given all the mayhem on Wall Street in recent days, however, it’s not entirely shocking that one did.

“Normally it’s $1 a share come hell or high water,” he said. “But the water came over the levee in this case.”

But there’s a reason why Reserve Primary Fund was the first money market fund to break the buck since the collapse of U.S. housing market has turned Wall Street upside down--and that’s because the fund is one of the highest yielding money market funds.

In other words, it’s one of the riskiest.

Crane explained: “The highest yielding (money market) funds are usually the most dangerous, not because of their investment,s but because of their investors. They attract the wrong kind of crowd--yield-chasers that are ready to move at the first sign of trouble.”

So, to put it in even broader perspective, Wall Street has been in deep trouble for many months, reaching something of a climax in recent days with the collapse of Lehman Brothers and the near collapse of insurance giant American International Group (AIG).

But only now, after months of turbulence, has a single money market mutual fund broken the buck due to redemptions.

Crane said the Primary Fund’s situation--brought about in part by the fund’s exposure to Lehman notes--should not be cause for widespread panic among money market fund investors.

Most other funds will be supported by their parent companies, he noted, such that they won’t be allowed to break the buck.

That view was supported by a report on WSJ.com Wednesday that said other money market funds with exposure to Lehman were being shored up by their sponsors. The report named Russell Investment Co. and its parent, Northwestern Mutual Life Insurance Co.; and Evergreen Investments and its parent Wachovia Corp. (WB)

The Primary Fund has no “deep pocket” parent company to step in, Crane explained.

Crane said the Primary Fund fits the risk profile for money market mutual funds, namely “a lack of deep pockets and a high yield.”

Other investors in money market mutual funds will likely want to hear Crane’s next sentence: “It’s hard to find anyone else who fits that profile.”

Keep in mind that money market mutual funds, which are discussed in this article, are different from money market accounts. Money market accounts are bank deposits eligible for FDIC insurance, while money market funds are not FDIC-insured.