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Money Market Funds 2010

Revisiting the Risk – Reward Dilemma

David Rothon, Director of Cash & Fixed Income Product Management, Northern Trust

Categories: Cash Management, Credit Risk Management, Credit & Collections, Debt, Liquidity Management, Money Market Funds, Risk Management, Working Capital Management, Regulatory

Risk, of course, must always be balanced against reward, and this dilemma is the subject of the article by David Rothon. While acknowledging that the European continues to encourage conservatism in treasurers’ investment approach, particularly in relation to sovereign risk, David identifies a growing appetite for a flexible MMF product to complement prime AAA-rated funds, and to provide enhanced yield on at least a portion of the company’s cash while still maintaining security and liquidity. What would such a product look like? Bearing in mind the regulatory changes that are in process, he sees the likelihood that in addition to today’s stable NAV (net asset value) MMFs, there will be some demand for variable NAV MMFs.

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