Households, businesses, nonprofit institutions, and state and local governments look to money market funds for stability, convenience, a high degree of liquidity, and a historically higher yield than competing products.
Money market funds offer all this while operating within a robust regulatory framework—both the comprehensive rules applied to all mutual funds and the risk-limiting regulations unique to money market funds. The monies invested with money market funds, in turn, provide short-term financing for businesses, banks, and governments at all levels.
Investors of all types have endorsed the current structure of money market funds—but they’ve also said they could abandon money market funds if certain regulatory reforms undermined these funds’ fundamental characteristics. For example, in a recent survey of corporate money market fund users, 77 percent said that they would move cash out of these funds if the funds were required to move from a stable net asset value (NAV) to a floating NAV.
It’s clear that the flight of investors in the face of such over-reaching federal proposals will have a severely negative impact on more than $2.5 trillion in assets managed by the more than 650 money market funds. Consider the impact of these proposals on you or your organization: