Standard Life Investments has closed three cash funds due to ‘potential changes in regulation’.

The Sterling Global Liquidity, Euro Global Liquidity and US Dollar Global Liquidity funds hold £3.5 billion between them.

Shareholders voted at the end of April to shut down the three funds. SLI says the move is due to the possibility that cash funds – also known as money market funds - may be brought within the scope of banking regulations.

‘As SLI does not offer banking products and services to its clients, it has decided to exit the [cash] funds business,’ a spokesman said.

Investors in the funds will be able to take their money out or transfer to a money market fund with Deutsche Bank. 

The Standard Life Investments Cash fund remains open to investors.

Adrian Lowcock, senior investment adviser at Bestinvest, says returns have been poor on many money market funds and some funds have experienced large outflows.

‘Standard Life was in the midst of the crisis with one of its funds losing investors over £100 million overnight and new rules will make it more difficult to run these funds profitably. As a result the decision to shut down these funds comes as no surprise,’ he comments.

Lowcock says a combination of low returns and high inflation makes money market funds look ‘unattractive’ for investors.