BlackRock Puts ETF Wrappers on Money Markets
Following the lead of Texas Capital, two iShares ETFs offer prime and government money market funds.
BlackRock Inc (BLK)., the world’s largest asset manager, has filled a gap in its expansive suite of offerings by rolling out two money market funds in ETF wrappers.
The iShares Prime Money Market ETF (PMMF) is the first ETF structured to invest in a broad range of money market instruments beyond government debt.
The iShares Government Money Market ETF (GMMF) represents the industry’s second such money market ETF investing in government instruments.
The GMMF structure follows the September launch of the Texas Capital Government Money Market ETF (MMKT), which was the first and was launched by Texas Capital Bank Private Wealth Advisors.
Like MMKT, the two new iShares ETFs are managed following Rule 2a-7, a provision of the Investment Company Act of 1940 that governs money market funds.
Aniket Ullal, Head of ETF Research at CFRA, said BlackRock is tapping into a rich vein of idle cash that investors have been socking away over the past few years as interest rates have been held at historically high levels.
“There is currently $6.8 trillion invested in traditional money market funds, and Blackrock's new launch will attempt to attract those investors who want the products in an ETF wrapper,” he said. “While there are already several ultra-short ETFs available in the U.S., these Blackrock products will be compliant with Rule 2a-7.”
Over the brevity of less than six months, MMKT has grown to $50 million and Ullal said, “It’s too early to tell if investors have an appetite for money market funds in an ETF wrapper, but Blackrock certainly has the scale and distribution muscle to pull it off.”
Steve Laipply, Global Co-Head of Fixed Income iShares, cited the amount of money sitting in traditional money market mutual funds among the drivers behind the launch of the two new ETFs.
“If you think about where we are in the market, we haven’t had cash be this attractive as an asset class for many years,” he said. “Cash is, in our view, an asset class that will be persistent for many years.”
