Northern Trust has launched a variable net asset value (VNAV) fund as part of its money market fund range to help investors meet the continued negative interest rate environment.
The Euro-denominated VNAV fund is designed to operate in negative return environments and supports institutional investors for cash management products.
“We anticipate the current negative Euro cash investment rate environment will persist for some time and the effect this has on interest accrual does not support a constant net asset value fund or structure particularly well,” says David Blake, director of international fixed income at Northern Trust Asset Management.
VNAV accounting enables the price of the fund to move each day to reflect its valuations. The launch of the fund comes as the U.S. Securities Exchange Commission (SEC) rules that institutional money market funds will have to convert to VNAV accounting within two years. The European Commission is deliberating a similar proposal.
“Regardless of the return environment, we believe VNAV is the future structure for money market funds due to their ability to allow continued access to high quality, same-day liquidity,” adds Wayne Bowers, chief investment officer for Northern Trust Asset Management EMEA and Asia-Pacific.
Northern Trust Launches New Money Market Fund
Northern Trust has launched a variable net asset value (VNAV) fund as part of its money market fund range to help investors meet the continued negative interest rate environment.