From the November/December 2012 issue of Treasury & Risk magazine

Some European Money Funds Already Employ Floating NAVs

U.K.'s Aviva saw assets grow after it switched to floating NAV in 2008.

As regulators on both sides of the Atlantic look at ways to make money market funds more robust, one option they’ve focused on is moving from a stable, or constant, net asset value (CNAV) model to a floating or variable (VNAV) model. 

Unlike stable NAV funds, floating NAV funds do not maintain a share price of $1 (or 1 euro or £1). Instead, the price fluctuates in line with mark-to-market valuations. While some believe this type of fund is less susceptible to redemptions during a liquidity crisis, the floating NAV model is unpopular among many corporate treasurers. But some funds in Europe already use this model.

Comments

Advertisement. Closing in 15 seconds.