Get ready for $1,000 money market shares: ICI

Get ready for $1,000 money market shares: ICI
Investors can say goodbye to $1 shares of money market funds and hello to $100 or even $1,000 shares — if the SEC requires the funds to float their net asset value, according to one ICI official.
MAY 16, 2012
Investors can say goodbye to $1 shares of money market funds and hello to $100 or even $1,000 shares — if the Securities and Exchange Commission requires the funds to float their net asset value, said Karrie McMillan, the Investment Company Institute's general counsel. The ICI, which represents fund firms, studied the market value of money market funds during the eurozone crisis last summer. The group found that the floating value of prime funds with the greatest exposure to the continent dropped by nine-tenths of a basis point, or nine-one-thousandths of a penny. “That kind of float isn't going to move a $1 share; it's not even going to move a $10 share. It might move the price of a $100 share,“ Ms. McMillan said. “Forget about breaking the buck; funds will have to break the Benjamin.” ICI's research shows that firms would have to re-price money market funds at $1,000 a share to show the changes in a fund's net asset value. Ultimately, floating the NAV won't change investor attitudes or behaviors, or prevent redemptions in a crisis," she said. Instead, Ms. McMillan said, it will just drive “billions of dollars away from money market funds and into unregistered cash products.” She maintains that the increased regulations that were put into place in 2010 are adequate to protect investors in money market funds. Those amendments reduced portfolio risk, increased liquidity and made the funds more transparent, Ms. McMillan said. “It's time for the SEC to recognize the success of its 2010 reforms and move on,” she said.

Latest News

Advisor moves: Atlas tops $1B as Wells Fargo, UBS add bank veterans
Advisor moves: Atlas tops $1B as Wells Fargo, UBS add bank veterans

Wells Fargo adds two bank-channel recruits, UBS lands a JPMorgan Chase veteran, and a multi-family office lifts Atlas past $1B

Advisor mom’s son used her password to log into clients’ accounts, sell deal with conflicts, according to Washington state
Advisor mom’s son used her password to log into clients’ accounts, sell deal with conflicts, according to Washington state

“The state comes down on you in years when you make 40% returns for clients,” said Bill Swayne, the advisor and son of Candace Swayne.

Osaic in talks with Anthropic as AI reshapes advisor workforce
Osaic in talks with Anthropic as AI reshapes advisor workforce

The Independent broker-dealer giant has had “active conversations” with the Claude maker, which is days away from its expected IPO

The retirement milestone advisors aren't tracking
The retirement milestone advisors aren't tracking

For Gen X clients entering life after work, answering the financial question isn't enough to solve the entire retirement equation.

Wealthtech firms target stock pay, pensions and heirs for advisors
Wealthtech firms target stock pay, pensions and heirs for advisors

Tools from Grantd, Income Lab and Healthspan Wealth aim to keep RIAs involved in clients’ biggest money decisions

SPONSORED Best Practices for Engaging Women Around Alternatives

Growing wealth, evolving priorities, and untapped opportunities are reshaping how women approach long-term investing.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.