Cash & Liquidity Management

Creating Money Market Fund Resilience in Extreme Market Conditions

Since stable Net Asset Value (NAV) Money Market Funds (MMFs) were first introduced into the United States and Europe, they have been generally considered as safe investments, and most recently as a ‘safe haven’ in the face of volatile markets, offering security and liquidity as well as a competitive yield. As other investment classes suffered throughout 2007-2008, MMFs proved to be resilient; for example, from the time that the sub-prime mortgage crisis first came to the attention of the market in July 2007, until the collapse of Lehman Bros in September 2008, MMF Assets Under Management (AUM) worldwide grew by $800bn. However, even the MMF industry took a hit in the third quarter of 2008 largely due to significant outflows in September when the Lehman Brothers collapse spooked institutional investors. Nevertheless, Goldman Sachs Asset Management (GSAM) was able to face the significant redemption pressures experienced, along with many of its peers.

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