“Were we to see a floating NAV implemented and the subsequent marginalization of the funds that would ensue, all of these entities would see their borrowing costs increase,” according to the ICD report.
“If the Commission fails to adopt a proposal that preserves the utility of MMMFs, business, cities, and states will be left searching for alternative, less regulated, cash management tools,” Hirschmann added. [PIMCO Short-Duration ETF Tapped as Money-Fund Substitute]
For instance,, any changes in the money markets would support the growing fixed-income ETF market, notably short-duration bond funds as a cash alternative. Some ultra-short-duration bond ETFs include:
- PIMCO Enhanced Short Maturity ETF (NYSEArca: MINT): 0.58% 30-day SEC yield; 0.99 year effective duration.
- Guggenheim Enhanced Short Duration Bond (NYSEArca: GSY): 0.37 year duration; 0.93% 30-day SEC yield.
- iShares Short Treasury Bond ETF (NYSEArca: SHV): effective duration 0.43 years; 0.03% 30-day SEC yield.
- SPDR Barclays 1-3 Month T-Bill (NYSEArca: BIL): effective duration 0.10 years; -0.07% 30-day SEC yield.
For more information on money market reform, visit our money markets category.
Max Chen contributed to this article.