Money market sector review announced by ABI

A consultation paper on the creation of a new type of money market fund has been launched by the Association of British Insurers (ABI).

The new category, to be known as either the Capital Stability Fund Sector or Treasury and Deposit Fund Sector, will be aimed at conservative investors looking to reduce their exposure to risk.

This follows the credit crunch-induced turbulence in the stock markets over recent months, which affected returns from many investment funds.

It is proposed that the new category only be allowed to have holdings in cash and short-maturity assets, such as commercial paper, Treasury bills and short gilts.

Commenting on the ABI review, Nicola Kembey at the Investment Management Association (IMA) said: ’In order to minimise confusion for UK consumers, the IMA and ABI have committed to harmonise their sector definitions where possible.

’IMA is, therefore, also reviewing whether it should adopt the new ABI ’cash like’ money market fund sector definition.’ADNFCR-2318-ID-19111747-ADNFCR