In recent days and weeks, several other companies have closed or shifted institutional funds from prime money market funds to government money market funds, including Columbia Threadneedle, Nationwide, PIMCO, and Oppenheimer.

The rules were adopted to mitigate the risk of a run on money market funds after several became distressed during the 2008 financial crisis.

“At the height of the financial crisis, the Reserve Primary Fund ‘broke the buck,’” says Swensen. “The regulations are designed to prevent that from happening again, they want to unanchor people from expecting that they’ll be able to take a dollar out for every dollar they put into a money market fund.”

“Breaking the buck” means that the fund was unable to round up to achieve its $1 per share NAV.

According to Bloomberg, almost $700 billion in assets has already moved from prime money market funds to government funds, and around $400 billion of that occurred in August and September. $100 billion moved out of prime money market funds during the week of Sept. 26 alone, according to Reuters.

Before the financial crisis, money market funds weren’t just a place to park cash. They would also produce a low but dependable yield. Now, however, such funds yield close to zero.

“Previously, these prime funds were able to offer higher yields because they took a small amount of credit risk, so investors got a free lunch of a bit of yield without taking the credit risk because of the stable NAV,” Swensen says. “Now, the yields are very small, and investors will be exposed to the volatility within prime funds. There is no free lunch there anymore.”

In fact, internet savings accounts now often yield 1 percent or more annually — more than money market funds.

That means that investors who still use prime funds will not only see little to no return on their investment over the short to intermediate terms, but may lose money if they must pay liquidity fees to sell their positions.

“Investors are generally okay with taking the additional credit risk,” Swensen says. “We have a philosophical difference with imposing liquidity fees and redemption gates on investors. We think prime funds are now problematic as products, whereas before these rules and before the financial crisis they functioned pretty well for over 20 years. We don’t think that investors should have to work so hard to monitor their cash holdings.”