Asset-Backed Commercial Paper Money Market Fund Liquidity Facility - AMLF
It sounds like a Tom Wolfe book, a la The Electric Kool-Aid Acid Test or The Kandy-Kolored Tangerine-Flake Streamline Baby. Only this time set in the world's most boring subculture.
Actually, far from being boring (for a financial organization), the AMLF (as it's commonly called) came about during one of the most fraught periods in Wall Street history. It was created during the financial crisis as one of the programs governmental agencies put into place in order to unfreeze markets and prevent a full-scale deterioration of the financial system.
At the time (the AMLF was announced in September of 2008), money market mutual funds, a commonly-used short-term investment vehicle, were having trouble meeting requests for withdrawals. Investors were desperately trying to get cash amid the (figurative) burning ashes of Wall Street, meaning that they were pulling funds out of money market accounts. Meanwhile, other markets were frozen by the financial crisis, leading to a situation where the funds themselves were having trouble selling assets.
The AMLF was put in place to solve this impasse. It remained in place for about a year and a half, eventually winding down in February of 2010. According to the Federal Reserve, which set up the program, the AMLF repaid all its loans in full, with interest.
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Finance: What is Net Asset Value (NAV)?5 Views
finance a la shmoop what is net asset value or nav nav is how mutual fund
shares are valued or priced at the end of each trading day take a look at this
mutual fund right here it has fourteen hundred seventy shares of Google and [mutual funds document]
three hundred shares of Amazon and five hundred shares of IBM and while you get
the idea at the end of each day the ask prices in
the bid-ask spread ie the ask is the price at which somebody will sell these
shares are added up and yep totaled in this case there are a hundred fourteen
different names in the portfolio and seven million bucks in cash all of which
total eighty-two point three million dollars in value at the end of this day
well there are two million shares outstanding exactly at this moment so
the nav at today's close well it's eighty two point three million divided
by two million shares outstanding to get forty one dollars fifteen cents per
share that 4115 is the nav of the mutual fund and what happens when more
investors join by you know putting in cash well like let's say somebody
invests a million dollars at the end of today well then the fund goes from [money lining up in rows]
having seven million bucks in cash to having eight million bucks in cash and
that investor just bought 1 million / 4115 4 nav share self that mutual fund
company printed out of thin air an incremental twenty four thousand
three hundred one shares bringing its total the two million twenty four
thousand three hundred one the total value of the fund is now eighty three
point three million bucks up from yesterday's eighty two point three
million and the shares outstanding in the fund are now two million twenty four
thousand three hundred one and yeah the nav didn't change just the shares
outstanding and it's nav not not pronounced nav although it'd be kind of
a cool name for a mutual fund anything never like find where you're going nav [tiny red car on map]
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