Swirsky believes it could even force some managers to pick up lower-quality securities that they would have not considered.
“If you do have to invest more broadly, that raises the question of whether you are lowering your standards,” Swirsky added.
The SEC is also considering reforms that would float the net asset value on money markets. The talks have escalated after the financial crisis when some money funds dipped below the $1 mark, which fueled a run-on-a-bank scenario in the money markets as investors feared the safety of the asset.
Nevertheless, any changes in the money markets would be a 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): 0.58% 30-day SEC yield; 0.99 year effective duration.
- Guggenheim Enhanced Short Duration Bond (NYSEArca: GSY): 0.37 year duration; 0.97% 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 0.12 years; -0.07% 30-day SEC yield.
For more information on the money markets, visit our money markets category.
Max Chen contributed to this article.