If money market mutual funds are required to shift to a floating net asset value reporting structure, as some policy makers have called for, many corporations would drop these funds from their portfolios.

According to a survey released Tuesday by the Association for Financial Professionals, four out of five companies that currently include money market funds in their short-term investment portfolios would likely move at least some of these investments to other vehicles if money funds were forced to shift to the new reporting structure.

The Association for Financial Professionals, which is based in Washington, D.C., reported that 54% of those surveyed, which included corporations and academic institutions, but not banks or financial institutions, said their company would shift corporate cash into bank deposits and U.S. Treasury securities and out of money funds if a floating NAV becomes reality. Of those responding, 22% would move funds out of money market funds and into non-2a-7 fixed-value investment vehicles, such as offshore money market funds, enhanced cash funds and stable value vehicles. Four percent said they’d move funds currently in money funds into other short-term, variable share price investments, such as ultra short bond funds.

"Where will $2.8 trillion be invested if we move to a floating NAV?" said Brian Kalish, the Association for Financial Professionals finance practice lead. "Many companies would not be able to consider [money funds] as viable short-term investment vehicles if the NAV floats because it would put them in violation of their own investment policies."

"If the $2.8 trillion moves into the banking system, we would be trading the diversification that [money funds] provide for the increased concentration risk of investing in a very small number of very large banks," he said.

On the other hand, some financial professionals surveyed said the new regulations would provide greater transparency for investors. This echoes the view expressed by the President's Working Group on Financial Markets, which said in October that reform would help money funds be more resilient during an economic crisis.

The Association for Financial Professionals, which serves a network of more than 16,000 treasury and finance professionals, said that it supports transparency, but remains concerned by the unintentional consequences of a transfer of risk to the banking system.