Money market educational primersWells Fargo Advantage Money Market Funds offer a series of educational primers about money market topics. Written in conjunction with our portfolio management and credit analysis teams, these primers offer a unique insight into money market topics, especially regarding money market securities, key features that relate to our investment strategies, and important credit considerations.
Asset-backed commercial paper (ABCP) is a form of short-term borrowing that is limited to a maturity of no more than 397 days. However, most ABCP is issued for a term of less than three months. ABCP allows financial institutions to offer an additional funding option for their customers by pooling their assets to back the paper. These assets may consist of trade receivables, consumer receivables, auto loans and leases, student loans, corporate loans, or other types of financial assets. Read more
Repurchase agreements (repos) are a type of short-term investment widely used by money market fund portfolio managers and shareholders. In fact, repo transactions by prime money market funds have increased sharply since the implementation of 2010 Rule 2a-7 revisions because the new rule requires funds to maintain at least 10% of their assets in daily liquid assets, which can include overnight repos. Read more
Variable-rate demand notes (VRDNs) have historically been a core holding in municipal money market funds because of their effectiveness as a tool for managing a fund’s liquidity and average maturity. The safety and soundness of the VRDN structure has been demonstrated through various market conditions and economic cycles, most notably during the 2008 financial crisis. In recent years, VRDNs have become a popular investment alternative for prime money market funds due to their ability to provide liquidity and enhance principal preservation. Read more