Putnam Investments has closed a $15bn money market fund at short notice on Thursday. The move followed institutional investors pulling money out or “experienced significant redemption pressure”. A lack of exposure to financial funds such as Lehman Brothers had no effect.
Money-market funds have been seen as extremely safe and is worth $3,500bn. Putnam's move is the second such a move in two days.
Putnam said, ”Serious constraints on liquidity in money market instruments created the risk that in order to process redemptions, the fund would realize losses in selling its portfolio securities. In the face of these challenges, the trustees determined to close the fund to ensure equitable treatment of all fund shareholders.”
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