“The transition from a homogeneous [constant net asset value]product will also force investors to adapt their cash allocations to align with their liquidity preferences and risk tolerance,” Moody’s added. “Whether MMF investors have the requisite skills to differentiate between a variety of heterogeneous investment offerings remains a question.”
Moody’s believes that larger providers will be better suited to utilize their scale to throw their weight around the market.
Meanwhile, fixed-income ETFs could take a piece of the $2.6 trillion money market. Specifically, Investors can take a look at short-duration bond ETFs options, including:
- PIMCO Enhanced Short Maturity Strategy (NYSEArca: MINT): effective duration 0.96 years; 0.57% 30-day SEC yield
- SPDR Barclays 1-3 Month T-Bill (NYSEArca: BIL): modified adjusted duration 0.13 years; -0.09% 30-day SEC yield
- iShares Barclays Short Treasury Bond (NYSEArca: SHV): effective duration 0.40 years; 0.00% 30-day SEC yield
- Guggenheim Enhanced Short Duration Bond (NYSEArca: GSY): average duration 0.37 years; 1.02% 30-day SEC yield
For more information on the money funds, visit our money markets category.
Max Chen contributed to this article.