JPMorgan Chase & Co., squeezed along with other money-market fund providers by low interest rates, has become the first to prepare investors for negative yields from funds that maintain a constant net-asset value.
Constant NAV share classes of the 3.84 billion euro ($5 billion) JPMorgan Euro Government Liquidity Fund and the 13.5 billion euro Euro Liquidity Fund will be replaced next month with new share classes that allow the funds to maintain their stable value by taking shares from investors, causing them to lose money, the New York-based bank said yesterday in a statement. The firm is giving customers until Nov. 18 to switch to the new share class, to a floating-value share class or redeem shares.
The $62.5 billion Reserve Primary Fund was forced to shut down in September 2008 after losses on debt issued by Lehman Brothers Holdings Inc. caused the fund to fall below $1 a share. That triggered a run on the industry and efforts by regulators to overhaul fund rules in the U.S.