BlackRock files to launch lower-risk money market fund ETFs

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BlackRock has filed to launch two money market funds in exchange traded fund wrappers, following in the footsteps of Texas Capital Bank’s rollout.

The new iShares Prime Money Market and iShares Government Money Market ETFs will both adhere to maturities, credit ratings and liquidity requirements under the Securities and Exchange Commission’s Rule 2a-7, intended to ensure a high-quality rating and minimal credit risk, according to filings.

In September, Texas Capital’s fund management division launched the industry’s first 2a-7 ETF, the Texas Capital Government Money Market ETF.

Both BlackRock funds will invest in securities maturing in 397 days or less, with some exceptions, and maintain a dollar-weighted average maturity of 60 days or fewer and a dollar-weighted average life of 120 days or fewer.

The filings do not disclose the proposed ETFs’ fees.

Texas Capital’s Government Money Market ETF charges 0.20 per cent.

BlackRock’s closest existing ETFs levy fees well are below that. The iShares US Treasury Bond ETF costs 0.05 per cent and 0-3 Month Treasury Bond ETF 0.09 per cent.

The firm liquidated two open-end money market funds — the $5.4bn TempFund and $872.2mn Liquid Environmentally Aware Fund — in September in response to pending SEC rule amendments mandating liquidity fees for prime institutional funds.