Money Market Funds Hold Their Own in Defined Contribution Plans
An excerpt from Money Market Insight Volume 29 Number 9, published by iMoneyNet and featuring a quote from PEI partner and co-founder Michael Sasso.
“Because prime money-market funds have been important to portfolios of 401(k) and related retirement plans, and because the managers of those plans have a fiduciary duty to their investors, ‘It was something of a slam-dunk decision to shift assets from prime to government money funds because of the 2014 money-fund reforms,’ Mike Sasso, partner and co-founder of retirement-fund adviser Portfolio Evaluations Inc., and a board member of the Plan Sponsor Council of America, told iMoneyNet.
It’s certainly not that plan sponsors abandoned money funds, but they didn’t want to expose their clients to the uncertainties of a floating NAV as well as to liquidity restrictions or fees,’ and particularly so, Sasso pointed out, when the yeild spread between prime and government funds was so narrow. Economic conditions have improved, however, in the nearly 12 months since money-fund reform took effect, Sasso noted, ‘and as investors get comfortable with provisions in the money-fund-reform regulation and as interest rates rise, plan sponsors may view prime funds differently.'”
To read the full article, as originally published by iMoneyNew in their Money Market Insight September 2017 Edition, click here.