Fund groups in 'rush' to launch ultra-short bond funds

Global fund management groups such as BlackRock, T Rowe Price and Federated Investors are rushing to set up ‘ultra-short' bond funds to lure investors away from the money markets.

The new vehicles will buy only short-maturity bonds, offering higher yields than money market funds with little extra risk. At the moment, the funds are thought to be only available to US investors but could move to UK shores. T Rowe Price was the latest group to launch such a fund this week, according to the FT, but Federated Investors, a money market fund provider, and Charles Schwab have also been granted permission to do so. The T Rowe Price Ultra Short-Term Bond fund will be managed by Joseph Lynagh who told the FT: "Investors might want to think about this fund as an alternat...