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Alternatives to Money Funds

BlackRock and Legg Mason launch new bond funds designed to work like money funds, but with very short maturities and a floating NAV.

By Miles Weiss, Bloomberg | Updated on May 17, 2013

BlackRock Inc. and Western Asset Management Co. are offering a new twist on traditional money-market funds as regulators are set to impose sweeping changes on the $2.58 trillion industry.

BlackRock, the world’s biggest money manager, and Legg Mason Inc.’s Western Asset unit have started bond funds designed to work much like money funds, with a key difference. The new “ultra-short” funds have share prices that fluctuate along with the value of their holdings, rather than a fixed net asset value, or NAV, a distinguishing feature of money funds. They also have shorter maturities than similar ultra-short bond funds that ran into trouble when credit markets froze in 2008.

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