What is the board’s responsibility if a security in a money market fund’s portfolio is downgraded or defaults?
If a security in the fund’s portfolio is downgraded, the fund’s board (or its delegate, such as the fund’s adviser) must promptly determine whether the security continues to present minimal credit risk. The board or its delegate must cause the fund to take whatever action is determined to be in the fund’s best interests. If a security defaults, the fund must dispose of the security as quickly as possible, unless the fund’s board determines that doing so would not be in the fund’s best interests. When a downgrade, default, or other development threatens to lower the fund’s NAV below $1.00 or make it unable to repay its $1.00 NAV per share (i.e., “break the dollar” or “break the buck”), the fund’s board may decide to suspend redemptions and liquidate the fund. Alternatively, an affiliate of the fund may take certain actions to prevent this occurrence. In some cases, the fund’s adviser or affiliate will purchase the troubled security. This type of action should be brought to the board’s a
If a security in the fund’s portfolio is downgraded, the fund’s board (or its delegate, such as the fund’s adviser) must promptly determine wither the security continues to present minimal credit risk. The board or its delegate must cause the fund to take whatever action is determined to be in the fund’s best interests. If a security defaults, the fund must dispose of the security as quickly as possible, unless the fund’s board determines that doing so would not be in the fund’s best interests.
