Money Market Funds Have Braced for Regulatory Changes – Payden & Rygel Offers a Viable Alternative

LOS ANGELES--(BUSINESS WIRE)--Payden & Rygel's Payden Limited Maturity Fund (PYLMX) is a viable alternative to institutional prime money market funds which are impacted by recent regulations. Last year the Securities and Exchange Commission (SEC) revised regulations designed to enhance the stability of money market funds. This move aims to prevent a repeat of the dramatic fund outflows seen in March 2020, when institutional prime money market funds experienced net redemptions of approximately 30% of assets over a two-week period. Over the course of 2024, money market funds have been adjusting to the reforms, with the deadline for implementing reporting standards on June 11.

The new rules include:

• Increased Liquidity Requirements: Money market funds must maintain at least 25% of their assets in daily liquidity (up from 10%) and 50% in weekly liquidity (up from 30%).
• Mandatory Withdrawal Fees: Institutional prime and tax-exempt money market funds must impose a fee on redemptions representing 5% or more of total assets unless liquidity costs are under one basis point.
• Discretionary Liquidity Fees: Non-government money market funds may impose discretionary fees of up to 2% on redeeming shares to manage redemption incentives and enhance fund stability.

These reforms may significantly impact the appeal and viability of institutional prime money market funds by increasing operational costs and likely reducing their yield advantage over government money market funds. Consequently, several large fund managers have announced their decision to liquidate their prime money market funds or to convert to government money market funds.

For investors seeking an alternative to money market funds, the Payden Limited Maturity Fund (PYLMX) presents an attractive option. This fund is not subject to the new SEC constraints, allowing for greater yield potential and diversification without the added liquidity fees.

“Since the firm’s inception four decades ago, our approach to cash management has focused on generating strong excess returns while providing necessary liquidity to our clients. The Limited Maturity Fund embodies our best ideas in this strategy,” says Kerry Rapanot, Head of Enhanced Cash Strategy. “Although it is not a money market fund and does not guarantee a fixed net asset value, the Fund has consistently delivered liquidity and income to investors through both stable and volatile periods since its inception in 1994. As cash continues to flow into money market funds despite regulatory changes, our Fund remains a time-tested alternative for institutional and retail investors able to take additional credit and interest rate risk.”

About Payden & Rygel

With $161.7 billion under management, Payden & Rygel is one of the largest privately-owned global investment advisers. Founded in 1983, the firm manages fixed income and equity portfolios through domestic and international solutions. Advising the world's leading institutions and individual investors, Payden & Rygel provides customized strategies across global capital markets. Payden & Rygel is headquartered in Los Angeles and has offices in Boston, London, and Milan.

For more information and to obtain a prospectus or summary prospectus, visit payden.com or call 800 572-9336. Before investing, investors should carefully read and consider investment objectives, risks, charges, expenses and other important information about the Fund, which is contained in these documents. Investment in foreign securities entails certain risks from investing in domestic securities, including changes in exchange rates, political changes, differences in reporting standards, and, for emerging-market securities, higher volatility. Investing in high-yield securities entails certain risks from investing in investment grade securities, including higher volatility, greater credit risk, and the issues’ more speculative nature. The Payden Funds are distributed through Payden & Rygel Distributors, member FINRA.

This material reflects the firm’s current opinion and is subject to change without notice. Sources for the material contained herein are deemed reliable but cannot be guaranteed. This material is for illustrative purposes only and does not constitute investment advice or an offer to sell or buy any security. Past performance is no guarantee of future results.