Special fund of a capital management company whose unit value is always 100 percent. This is because the fund’s assets, and thus the unit value, are not valued at current market prices. Instead, the valuation is based on amortized cost accounting. As a result, such funds reflect neither the market risks of the underlying assets nor any losses incurred in the unit value. – The advantage here is that investors who redeem their fund units are always paid out 100 percent. However, if many investors redeem certificates at the same time, the MMF-CNAV is forced to sell assets at the market price. The fund can then quickly become insolvent, to the detriment of investors who have not yet sold their certificates. The supervisory authorities rightly see a systemic risk here. This risk also exists – or even more so – when banks provide contractually agreed financial assistance (implicit guarantee; sponsor support) to MMFs. The financial crisis has shown on occasion that the guarantor bank can then also find itself in an unexpected tailspin. – See money market funds, support, implicit. – See BaFin Annual Report 2012, pp. 53 f. (further risks; regulatory approaches; dangers of regulatory arbitrage).
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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