European Money Funds Cope with Negative Yields (CNBC)

Funds look at how to charge investors without breaking the buck.

With yields on French and German government bonds now in negative territory and the prospect of the European Central Bank charging banks for deposits, companies that offer European money market funds are trying to figure out how to pass negative rates on to their investors, according to CNBC. The situation is complicated because the funds are trying to maintain a constant net asset value.

The story cites the possibility that funds would reduce investors’ number of shares to reflect the negative income, or charge investors fees outside of the fund structure. It quotes HSBC’s Jonathan Curry saying that some options “may require changes to the fund prospectus and articles of association.”


See the full story here.

For more stories on the issue of negative rates, see Denmark Tries Negative Rates and What Would Negative Rates Really Mean?





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