The possibility of new money market mutual fund regulations looms, and two large fixed income managers are working on products that would fill a similar niche without actually being money funds.

Mike Weiss of Bloomberg reports that both BlackRock [profile] and Legg Mason [profile] are getting into the not-quite-money-fund game, with BlackRock launching its BlackRock Ultra-Short Obligations Fund in November 2012 and Legg filing for the Western Asset Ultra Short Obligations Fund last week.

Unlike current money funds, both of these products boast floating net asset values (NAVs). Unlike other ultra-short bond funds (a $280.1-billion niche as of December 31) which have one- to two-year maturities, the new funds keep their average maturities under 90 days (the old limit for money funds, reduced to 60 days in 2010 by the SEC). Richard Hoerner, head of BlackRock's global cash-management business, insisted that his product is "clearly" not a money fund, despite similarities. 

Edited by: Neil Anderson, Managing Editor


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