Having liquidated a money market fund in the meltdown, Utendahl Capital Management now plans to launch a money market-like fund with a floating net asset value.
The New York asset manager has filed with regulators to start the Utendahl Floating NAV Fund, which will invest in two underlying funds — the Utendahl Credit Floating NAV Fund, which is subadvised by Pimco, and the Utendahl Government Floating NAV Fund, managed by Utendahl.
Those underlying funds do not seek to maintain a stable share price of $1 as traditional money market funds do and will not use the amortized cost method of valuation, according to the filing. Instead, they will generally value their holdings using current market prices furnished by an independent pricing service. As a result, each underlying fund's share price, which is its net asset value per share, will vary and reflect the effects of unrealized appreciation and depreciation and realized losses and gains. The fund and underlying funds will seek to maintain a net asset value close to $10 a share, the filing said.
"This feature is designed to maintain liquidity and reduce the likelihood of shareholder redemptions prompted to avoid unrealized depreciation or realized losses," it said.
Utendahl liquidated the UCM Institutional Money Market Fund in April 2009 without any shareholder losses.
After the Primary Fund's net asset value dipped below $1 a share, triggering redemptions across the industry, some proposed that money market funds be required to adopt a floating net asset value. But others in the industry have said investors would flee to other short-term instruments if money market funds do not strive to maintain a stable net asset value.
Utendahl did not return calls seeking comment.