The Treasury plans to sell $138 billion of bills on Tuesday.
“What we saw flow out was pretty quickly exiting, whereas what will come back will be spread over time, in drips and drabs,” Cunningham said.
Even if the appetite for prime funds eventually recovers, the additional risks like the floating NAV and the potential lock-ups suggest that government-only funds will continue to garner the lion’s share of any new inflows.
Demand for prime funds isn’t “ever going to make it back to what it was pre-reform,” said John Donohue, the chief investment officer for global liquidity at JPMorgan Asset Management, the third-largest money fund provider with $240 billion in assets. “In the new world, the govvie funds will be the large flagship in the money funds space.”
This article was provided by Bloomberg News.