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Fund Groups Launch MMF Alternatives

In advance of anticipated SEC rule changes that would require institutional money market funds to float their NAVs, some fund groups are launching ultra-short bond funds that could compete directly with money funds for corporate cash.  These ultra-short bond funds are considered money market “like” funds -- following many of the same investment restrictions as 2a-7 money market funds but with some exceptions that could boost yield, such as allowing investments in securities with slightly longer maturities. These funds will compete directly with money market funds and may gain an advantage if and when institutions are unable to invest in money funds with a stable NAV.