A recent study by Moody's Investors Service found that from 2007 to 2011, money market funds' holdings of asset-backed commercial paper ("ABCP") have decreased from 25% to 8.3%. Moody's found three main reasons for this decline:

1)     There has been a general aversion to structured finance securities after the financial crisis;

2)     Some managers have concerns about ABCP hurting a fund's ability to maintain daily liquidity; and

3)     Some managers do not feel they have the resources, or information, to fully analyze the underlying risks of ABCP.

There has also been a decline in the availability of ABCP that meet the quality criteria of money market funds.  Nonetheless, many managers of larger money market funds still invest in ABCP as a way to reduce risk.  These managers believe that any fund losses on ABCP would be minimized by associated collateral.

Moody's analysis was based on 82 European and 77 U.S. Moody's-rated money-market funds, with total assets under management of $1.2 trillion.