BMO Global Asset Management has launched the BMO Institutional Prime Money Market Fund to provide institutional and retail investors with a money market fund that will eventually have a floating net asset value (NAV).
Managed by BMO Global Asset Management's team of experienced money market professionals, this new fund is expected to have a stable NAV until approximately 3 October, 2016. Thereafter, the fund's NAV may begin to float as a result of an expanded four decimal NAV (eg USD1.0000) and slight changes to the market values of the underlying portfolio of very short term, income securities. The new fund also may be subject to liquidity gates and/or redemption fees as required by the new money market fund regulations.
"As a global investment solutions provider, BMO strives to meet the ever-changing needs of our institutional and retail clients by continuing to build our selection of funds," says John Blaser, President of BMO Funds. "The new regulatory reforms will soon restrict institutional investors from stable NAV money market funds other than government money market funds. We expect a significant shift of assets out of prime money market funds and into government money market funds. As a result, the new fund is expected to provide enhanced total returns well above the expected low rates of return in government money market funds in the new regulatory environment."
"This new fund brings BMO Global Asset Management's total US suite to 45 mutual funds. It will be an excellent addition to our existing family of money market funds, comprised of the BMO Prime Money Market Fund, BMO Tax-Free Money Market Fund and BMO Government Money Market Fund, which will remain ideal for institutions with a preference for a stable NAV," says Blaser.