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MMFs: The Funds that Deliver

by Robin Page, Chief Executive

We are delighted to introduce TMI’s 2010 Guide to Money Market Funds, published in association with the Institutional Money Market Funds Association (IMMFA). Firstly, congratulations are in order, as this year the Association is celebrating its tenth anniversary, having been established in the millennium year by a group of money market fund managers to represent the industry and set appropriate standards for its operation. Its members now account for over EUR430bn of assets under management in European-domiciled, constant net asset value triple-A rated MMFs, compared with EUR40bn ten years ago.

When we published the 2009 edition of the Guide, our Editor Helen Sanders noted that MMFs were ‘truly coming into their own’, almost all of them having managed to provide both liquidity and security during a fearsome period for the financial sector. Today Travis Barker, Head of Liquidity Business Development at HSBC Asset Management, writes of the returning confidence of treasurers in ‘prime’ MMFs, i.e., those which invest in financial institution and corporate assets, reflecting a more balanced view of risk than we saw during 2008 when government funds took precedence. This is one among several positive signs that treasurers have not forgotten the lessons learned during the crisis  and are taking an informed approach to their cash investments.

While MMFs did indeed prove to be among the most robust and reliable investments during the crisis, there were a few unfortunate exceptions, and there is now strong market support for tighter regulation to ensure that they are managed to common standards. Several of the articles deal with this question: the Secretary General of the IMMFA, Nathan Douglas, provides a succinct review of recent changes, including the revision by the Association of its Code of Practice, initiatives by the Committee of European Securities Regulators (CESR) published in May this year and, in the US, amendments to the rules of the Securities and Exchange Commission (SEC) which govern the management and operation of MMFs.