BlackRock said it would change its lineup of money market mutual funds to make them comply with new federal regulations.
BlackRock, in a letter to investors on Monday, said it would offer funds that invest solely in government securities and others with floating net asset values that would invest in corporate debt. The company said it would have funds that limit holdings to securities with maturities of seven days or less. The firm also said it will offer separately managed accounts and private funds on a “limited basis.”
BlackRock joins companies such as Fidelity Investments and Federated Investors in making changes to its lineup after the Securities and Exchange Commission last year wrote new rules for how non-government and institutional money market funds should operate. Under the new system, which takes effect in October 2016, institutional funds that invest in non-government securities will have to have a floating share price and impose redemption fees and gates in times of market stress.
“The big companies are offering a range of choices, because no one knows exactly what customers will want,” said Peter Crane, president of Crane Data, a money fund researcher.
According to Crane's website, BlackRock has $217.5 billion in money market assets, making it the third largest U.S. provider of the funds. Fidelity ranks first and J.P. Morgan Chase & Co. ranks second.
BlackRock's short-maturity fund could buy corporate debt, the company said in its letter. The seven-day limit means the fund “would be unlikely to trigger redemption gates and liquidity fees,” according to BlackRock.