On Monday, BofA Global announced the closing and liquidation of its Bank of America Global Liquidity Euro Fund, a Dublin-domiciled fund investing in Euro money market instruments and offered to European and "offshore" investors. A statement sent to shareholders, entitled, "Banc of America Capital Management (Ireland) to Close Bank of America Global Liquidity Euro Fund," says, "Responding to challenging market conditions in Europe, Banc of America Capital Management (Ireland), Limited (the "Manager") announced today that it will close the Bank of America Global Liquidity Euro Fund (the "Euro Fund"). The Irish-domiciled fund will be closed through an orderly liquidation that the Manager, acting on behalf of the Euro Fund, expects to complete on or about 21 September 2012 (the "Closure Date")."
BofA's communication continues, "The decision to close the Euro Fund follows the European Central Bank's July 5th rate cut, which reduced its benchmark interest rate to a record low of 0.75% and the rate on overnight deposits to 0.00%. The resulting yield pressure on Euro-denominated short term debt makes it difficult to manage the Euro Fund within its investment guidelines without having a negative effect on the value and yield of the Euro Fund. Based on this outlook, the Euro Fund's Manager and Directors believe the closure of the Euro Fund to be in the best interest of the existing shareholders."
It adds, "Investors in the Euro Fund may choose to redeem their investments at any time prior to the Closure Date. Any shares of the Euro Fund outstanding as of the Closure Date will be compulsorily redeemed as of close of business on the Closure Date, and proceeds will be distributed to investors in cash. Consistent with the investment objectives and policies outlined in the Euro Fund's prospectus, the Euro Fund will continue to seek to maintain its net asset value (NAV) of E1.00 per share. The NAV remains at E1.0000 per share today. Importantly, the Manager and BofA Advisors, LLC1 (the "Investment Manager"), have agreed to waive all management fees during the closure period. No new subscriptions will be accepted by the Euro Fund effective immediately."
The shareholder piece says, "Michael Pelzar, President of BofA Global Capital Management, emphasized that the decision to liquidate the Euro Fund reflects challenges specific to the markets in which the Euro fund invests. The decision does not reflect a shift in the firm's business strategy, nor does it affect the Bank of America Global Liquidity U.S. Dollar Fund, which will remain open as an investment solution for our clients."
It quotes Pelzar, "The decision to close the Euro Fund was driven solely by the low rate environment in Europe, the likelihood that rates there will remain low for the foreseeable future, and the relatively small size of the Euro Fund. It does not reflect a change either in our business model or in our commitment to providing high-quality cash asset management products and services to non-U.S. investors."
BofA Global ranks 17th out of 19 managers of Euro money market mutual funds with E639 million in assets and ranks 19th out of 20 managers of International or "offshore" money market funds with $2.775 billion in USD and Euro combined assets as of August 17, 2012, according to our Money Fund Intelligence International.