This paper attempts to quantify the impact of a liquidity premium in money market funds by modeling three hypothetical portfolios of 29, 60, and 121-day weighted average maturities (WAM). Through our modeling process, we found the WAM extensions would have resulted in 0.11% and 0.31%, respectively, of additional annual yield potential over the 29-day WAM portfolio. The premise of the exercise is that by using separately managed accounts of custom maturities, investors may be able to recuperate part of the reduced yield caused by the more stringent liquidity requirements of the revised 2a-7 rule.

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