The Investment Company Institutes money fund working group has recommended a series of measures to make money funds more stable, less prone to massive redemptions all at once and more transparentall in an effort to help the funds maintain investors faith and their $1 NAV.
The ICI suggests that funds have up to five days to honor redemptions or purchases and that they disclose their holdings every month. And, in order to reveal large shareholders such as institutions, whose redemptions would have a tremendous impact on the fund, that they disclose the types of investors they have.
The ICI also wants money market funds to have more conservative and liquid asset allocations, with a cash balance of between 5% and 20% that could comprise Treasuries and other securities that can be redeemed in seven days or quicker. The association also suggests that the average weighted maturity of money funds holdings be 75 days rather than 90.
It will be up to the Securities and Exchange Commission to rule on the changes.