Mutual fund giant Fidelity signaled a change in the money-market fund landscape with its January announcement that it plans to convert some of its prime money funds into government funds.
The conversion of the prime funds—those that invest in corporate securities—seems to anticipate a mass move by investors out of prime funds in response to new Securities and Exchange Commission (SEC) regulations. Those rules will require institutional prime funds to adopt a floating net asset value (NAV), instead of the stable, $1-a-share NAV investors are accustomed to, and will allow funds to use redemption fees and gates to discourage withdrawals in times of market stress.
The changes are expected to discourage many corporate treasurers from investing in prime funds. But proposals by the federal government that would alleviate some problems related to the rules changes, and the prospect of higher yields on prime funds, could help reconcile treasurers to using prime funds in their altered form, some observers say.
Continue Reading for Free
Register and gain access to:
- Thought leadership on regulatory changes, economic trends, corporate success stories, and tactical solutions for treasurers, CFOs, risk managers, controllers, and other finance professionals
- Informative weekly newsletter featuring news, analysis, real-world cas studies, and other critical content
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the employee benefits and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
*May exclude premium content
Already have an account?
Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Susan Kelly
Susan Kelly is a business journalist who has written for Treasury & Risk, FierceCFO, Global Finance, Financial Week, Bridge News and The Bond Buyer.
