What are the risks associated with money market funds?

Even though money market funds are strictly regulated and the Goldman Sachs Euro Liquid Reserves Fund is very consistently geared towards achieving its objectives (capital preservation, daily liquidity, maximization of current income) and has always achieved its objectives since its launch in 1999, losses can never be completely ruled out. In this context, credit risk and liquidity risk should be mentioned in particular. Credit risk is when the default of a counterparty or an issuer of an asset held in the portfolio that does not meet its payment obligations has a negative impact on the portfolio. Liquidity risk is when you cannot find a party willing to buy an asset that the portfolio wants to sell, which could affect the portfolio’s ability to meet redemption requests when needed.