Not All Funds Are Alike

1 min read

Over the past year, the money fund industry has been shaken by credit and liquidity issues that resulted in more than $50 billion in direct support from fund sponsors. This “behind the curtain” support has tested the resolve of many money fund families and affected the industry in a variety of ways. As a result, a number of money funds have either closed, merged, or are seeking buyers. The risks of maintaining a constant dollar share price and 100% liquidity have forced smaller players and revenue stressed managers to exit the business while larger money fund families have pursued a variety of methods to control their business and investment risks; and all are working to manage competitively while anticipating purposed regulatory changes that will affect the entire industry.

All of these developments have left the money fund world scrambling to reengineer how they invest, how they control risk, and how they position and distribute their product. In this environment of uncertainty (and historically low yields), we have witnessed a shift in policy and investment practices between fund families that has revealed growing divergences in how the funds are managed.

Over the past year, Capital Advisors Group has conducted extensive investigation into risks in the money fund industry and have cataloged, in great detail, the differing risks from fund to fund as part of our Money Fund Due Diligence research. The result of this ongoing research demonstrates a material difference in risk exposure from one money fund to another.

Given this backdrop, this month we thought we would focus on the safety of prime money market funds and the risks associated with them, as not all funds are the same.

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Best Regards,

Ben Campbell
President & CEO

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