Money Markets & ETFs

On the other hand, Stevens is in favor of implementing a type of redemption fee on money market funds during times of duress as a way to dissuade a “run on the banks” event, similar to what happened during the 2008 financial crisis.

“Liquidity fees and gates precisely address the core problem that regulators express greatest concern about: heavy redemption pressures in periods of market turmoil,” Stevens said.

Nevertheless, any changes to the status quo in the money markets would be a huge boon for the growing fixed-income ETF market, notably short-duration bond funds as a cash alternative. Ultra-short-duration bond ETFs include:

  • PIMCO Enhanced Short Maturity ETF (NYSEArca: MINT): 0.57% 30-day SEC yield; 0.95 year effective duration.
  • Guggenheim Enhanced Short Duration Bond (NYSEArca: GSY): 0.37 year duration; 1.11% 30-day SEC yield.
  • iShares Short Treasury Bond (NYSEArca: SHV): effective duration 0.39 years; 0.02% 30-day SEC yield.
  • SPDR Barclays 1-3 Month T-Bill (NYSEArca: BIL): effective duration 0.14 years; -0.09% 30-day SEC yield.

For more information on the money market, visit our money markets category.

Max Chen contributed to this article.