BlackRock Money Market Funds Refuse to Lose Value - Bloomberg View

Sort of proof that the well-intentioned benevolence of regulators shouldn't be one-sided in its approach. If the broader market wants something that the regulators are prohibiting, the market will find a way. Highlights below:



BlackRock Money Market Funds Refuse to Lose Value - Bloomberg View

See, the way it normally works is, if you have $10,000 in a money market fund, you have 10,000 shares each worth $1.2 When the fund pays interest, it does it by distributing shares: You had 10,000 shares, it paid 0.1 percent interest, now you have 10,010 shares each worth $1.

BlackRock's innovation is: When the fund pays negative interest, it does it by distributing negative shares. You had 10,000 shares, it paid negative 0.1 percent interest, now you have 9,990 shares each worth $1. But your shares never lost value. Some of them just disappeared is all. It's a reverse distribution.3