Financial advisers are concerned investors will free from money market funds en masse if SEC begins reforms increasing money fund stability, InvestmentNews
One rule would require prime institutional funds would be required to to have NAVs that changed according to the market that day and the other rule would restrict redemptions and charge withdrawal fees for all funds. The two proposals may be combined.
Financial advisers worry stems from the idea that a floating NAV would make money market funds less attractive as a place to park cash. The level of safety and liquidity that attracts investors to these funds wouldn't be there. The trade pub quoted a speech delivered last week by Chris Donahue
, president and chief executive of Federated Investors
], a major money market mutual fund shop:
“If there is a floating NAV on prime institutional money funds ... then those people are going to be out of the money fund,” Donahue reportedly said at a KBW conference.
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