L&G to shut down 257 million euro money market fund
LONDON (Reuters) - Legal & General Investment Management (LGEN.L) is shutting down its 257 million euro (203 million pound) money market fund, the latest sign fund firms in the 1 trillion euro European sector are struggling to handle ultra-low and negative bond yields.
The LGIM Euro Liquidity fund, part of LGIM's 18.6 billion pound stable of cash and liquidity strategies, is to shut on October 3, the fund said in a statement on Wednesday.
Money market funds, highly liquid products that invest cash in government bonds and short-dated paper issued by top-rated banks, are commonly used as alternatives to bank deposits.
However, they have struggled to generate returns in recent months as yields on short-term German paper have dipped into negative territory while in France they are close to zero.
In July the fund, run by head of money market funds Jennifer Gillespie, was closed to new money in the wake of the European Central Bank's decision to cut the deposit rate from to zero from 0.25 percent.
On Wednesday the Financial Times reported that big managers are preparing to pass on the impact of negative short-term interest rates to investors.
(Reporting by Laurence Fletcher)
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