What is meant by client concentration, and what does the report recommend on the matter?
Client concentration refers to the number or type of investors holding shares of a fund. A money market fund’s ability to maintain sufficient liquidity (as discussed above) is closely related to the composition and diversification of its shareholder base. A fund with a few shareholders with large accounts seeking maximum yield, for example, could be more likely to face sudden redemption pressures than would a fund with many small accounts held by retail investors. The report recommends that money market funds adopt “know your customer” procedures and suggests that funds be required to provide monthly website disclosure to the public about client concentration levels and the risks involved.
