Structural Overhaul or Just a Makeover for Money Funds?

1 min read

It likely goes without saying that here at Capital Advisors Group we have been keeping a very close watch over the controversy that is heating up over the regulatory structure of money market funds. With the Obama Administration now stepping in to exercise its power to question and potentially modify SEC suggested changes to money funds, there is now more uncertainty than ever over the evolving structure of this asset class.

There is sure to be no shortage of regulatory and political wrangling during the little more than two months before new rules are handed down to the industry. Some of the general, more benign proposals on the table now include improved liquidity, shortened maturity limits and higher credit quality among money fund investments. However, there also exist more radical proposed rule changes including a floating NAV and the ability of funds to halt redemptions without SEC approval. Whatever the outcome of this summer’s negotiations, it is clear the sidelines appear to be the most attractive vantage point until a transparent view of money funds’ regulatory structure emerges.

While it’s still unclear as to what, exactly, will happen to money funds this fall, we can be fairly certain that the product will differ from the present model. Therefore, in this month’s in-depth research piece, (which can be found in the column to the left or here) we’ll provide greater detail on the proposed SEC amendments to the 2a-7 Rule as well as our own recommendations on what mitigating factors may serve to reduce risk in money funds.

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Best Regards,

Ben Campbell
President & CEO

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