In a move to boost investor’s confidence in money market mutual funds, major fund companies have met the U.S. Treasury’s October 8 deadline by joining a temporary guaranty program.
Among the companies that will participate are BlackRock, Charles Schwab, Dreyfus, Evergreen, Federated, Fidelity Investments, First American, Invesco AIM, JPMorgan Chase, Morgan Stanley, Putnam, TCW, Legg Mason’s Western Asset Management and the Vanguard Group.
This action should enhance market confidence and alleviate investors’ concerns about the ability for money market mutual funds to absorb a loss. Investors in money market mutual funds with a net asset value that falls below $1 would be notified that their fund triggered the insurance program.
On September 19 the U.S. Treasury Department announced the establishment of a temporary guaranty program for the U.S. money market mutual fund industry. For the next year, the U.S. Treasury will insure the holdings of any publicly offered eligible money market mutual fund – both retail and institutional – that pays a fee to participate in the program.