A filing for the new UBS Liquid Reserves Fund explains, "The fund invests only in certain eligible reserve assets that payment stablecoin issuers are permitted to maintain under the Guiding and Establishing National Innovation for US Stablecoins Act (​the '​GENIUS Act') and any regulations adopted thereunder. These eligible reserve assets include, and the fund intends to invest only in, cash, securities issued by the US Treasury with a remaining maturity of 93 days or less or issued with a maturity of 93 days or less, and overnight repurchase agreements collateralized by securities issued by the US Treasury and cash. The fund primarily intends to serve as a reserve asset for stablecoin issuers. The fund does not invest in stablecoins or stablecoin issuers. The fund has adopted a policy to invest 99.​5% or more of its total assets in cash, government securities, and/​or repurchase agreements that are collateralized fully (​i.​e., collateralized by cash and/​or government securities) in order to qualify as a '​government money market fund' under federal regulations." It explains, "UBS Asset Management (​Americas) LLC ('​UBS AM') acts as the investment advisor. As investment advisor, UBS AM makes the fund'​s investment decisions. UBS AM selects money market instruments for the fund based on its assessment of relative values and changes in market and economic conditions.... Shares of the fund are expected to be held primarily by one or more stablecoin issuers as all or a portion of the reserve assets that back the outstanding stablecoins issued to their customers. Stablecoins generally are a type of cryptocurrency that are designed to maintain a stable value by pegging their value to another asset, such as a fiat currency like the US dollar, and stablecoin holders generally are permitted to redeem their stablecoins for a fixed amount of value. Although the fund does not invest in stablecoins or stablecoin issuers, the assets of the fund are expected to fluctuate depending on the creation (​minting) of additional stablecoins or the redemption (​burning) of outstanding stablecoins. Stablecoins and other digital assets that stablecoins may be used to purchase or sell may face periods of uncertainty and volatility that result in the potential for rapid or unexpected requests by one or more stablecoin issuers to redeem or purchase the fund'​s shares.... The minimum investment level for initial purchases generally is $​1,​000,​000 for Institutional Shares; $​50,​000,​000 for Preferred Shares; and $​500,​000,​000 for Ultra Shares, as determined on a household basis." UBS also launched UBS Select 100% US Treasury - Token-​Enabled share class (​TOKXX) earlier this year for BNY'​s LiquidityDirect portal. (​See the filing for TOKXX here.) Rob Sabatino, UBS AM Head of Global Liquidity Portfolio Management, comments, "Offering a GENIUS Act-​compliant MMF in addition to a token-​enabled MMF reflects UBS Asset Management'​s commitment to modernizing liquidity management. We are meeting the evolving needs of both traditional and digital-​native clients by combining the stability of institutional cash strategies with the efficiency of tokenized infrastructure. This builds on our broader digital asset initiatives, including the 2024 launch of the UBS USD Money Market Investment Fund Token ('​uMINT'), our tokenized money market fund in Singapore."

Bloomberg writes that the "Dash for Cash Sends Money-​Fund Assets to Record $​8.​3 Trillion." The article states, "Investors boosted the total amount in US money-​market funds to a record $​8.​281 trillion as uncertainty surrounding the Federal Reserve'​s monetary policy path fuels demand for cash-​like assets. Some $​66 billion rushed into the money-​market fund industry in the week ending May 28, according to the latest figures from Crane Data LLC. About $​41 billion of that came on Thursday as investors adjusted their portfolios before month'​s end. In all, the funds have attracted about $​172 billion so far this year." The piece tells us, "The recent inflows have come as traders abandoned bets that the Federal Reserve will resume cutting interest and began wagering that a hike would be needed to help quell a resurgence of inflation tied to the Iran war. Swaps markets imply a roughly 60% chance that officials increase rates by a quarter-​point this year. To Deutsche Bank strategist Steven Zeng, the recalibration is fueling demand for front-​end US rates, which -- along with other types of short-​term securities -- make up the holdings of most money-​market funds. As Fed expectations shifted from cuts to hikes, much of that repricing is captured in the bill curve, meaning more attractive yields,' he said." Bloomberg adds, "Appetite for money-​market funds has been rising for years thanks to their attractive yields and ease of access for investors ranging from Wall Street professionals to corporate treasurers and everyday American savers. The funds also tend to be faster than other investment vehicles to pass along higher yields to investors. The seven-​day average yield for US money funds was 3.​34% as of May 28, according to Crane Data."

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