Late last week, we learned about the launch of a new family of money market funds, as well as the liquidation and outsourcing of another one. TCG Financial Services out of Miami appears to be attempting to create money funds comprised of FDIC-insured deposit blocks with the launch 10 new government money market funds, according to recent SEC Edgar filings. A story on ignites.com, entitled, "Small Shop Sees Massive Opportunity in Money Fund Rule," explains that TCG says the move is fueled by the SEC's money market reform. Writes Ignites author Peter Ortiz, "In part, the move reflects the shop's hopes to help its funds grow by attracting investors uncomfortable with another major provision of the rule: moving institutional prime funds away from a stable, $1 per share price." The 10 funds are: TCG Cash Reserve Money Market Fund (TCHIX), TCG Daily Liquidity Government Money Market Fund (TCDIX), TCG Liquid Assets Government Money Market Fund (TLAIX), TCG Liquidity Plus Government Money Market Fund (TLPIX), TCG US Government Select Money Market Fund (TUSIX), TCG US Advantage Money Market Fund (TUAIX), TCG US Government Primary Liquidity Money Market Fund (TUPIX), TCG US Government Max Money Market Fund (TUMIX), TCG US Premier Government Money Market Fund (TURIX), and TCG US Government Ultra Money Market Fund (TUUIX). Each of these funds has institutional shares and may add up to 4 other share classes.
Jorge Coloma, managing director at TCG, tells ignites, "I think because of the new rule there is going to be more demand for U.S. government money market funds.... We think it will be a shift from prime institutional funds to U.S. government money market funds." Coloma adds that, with interest rates expected to rise, money market funds are likely to become more profitable. States the Ignites article, "Each of the 10 TCG funds now has $102,600, but that should grow to $5 million per fund by the end of the week, says Coloma. By the end of the month, TCG expects to have $100 million in total assets under management across its line of first-ever mutual funds, he says."
The prospectus from the TCG Cash Reserve Government Money Market Fund, submitted September 2 to the SEC, explains the investment objectives of the fund: "Under normal conditions, the TCG Cash Reserve Government Money Market Fund (the "Fund") seeks to achieve its objective by investing in short-term money market instruments that, at the time of investment, have remaining maturities of 397 calendar days or less from the date of acquisition. The Fund's portfolio will maintain a dollar-weighted average maturity of 60 days or less and a dollar-weighted average life of 120 days or less. Under normal circumstances, at least 99.5% of the Fund's assets will be invested in certain obligations of the U.S. Government, its agencies and instrumentalities and repurchase agreements with regard to such obligations."
It continues, "The Fund will invest in deposits ("Deposits") which are exclusively in accounts with Federal Deposit Insurance Corporation ("FDIC") insured banks or savings and loan associations which are backed by the full faith and credit of the U.S. Government. Deposits that are backed by the full faith and credit of the U.S. Government are those that the resources of the U.S. Government stand behind. Further, each of the Fund’s Deposits will not exceed the FDIC's Standard Maximum Deposits Insurance Amount ("SMDIA") which currently is $250,000 per depositor, per insured bank inclusive of the principal and accrued interest for each Deposit. Accordingly, because each of the Fund's Deposits will fall within these FDIC amount limits, the entire amount of each of the Fund's Deposit will be fully insured by the FDIC. The Fund may invest in other money market funds that have substantially the same investment objective and strategies as the Fund."
In other news, we learned that Williams Capital is will be liquidating its Williams Capital Government Money Fund and outsourcing the management of its money market fund to Northern Trust, which has launched new share classes for Williams. A Sept. 5 prospectus filing says, "Northern is introducing the Prime Obligations Portfolio Williams Capital Shares (WCPXX), and the US Government Select Portfolio Williams Capital Shares (WCGXX). The funds are available to clients of Williams Capital Group LP.... The Prime Obligations Portfolio "is a money market fund that seeks to maintain a stable net asset value ("NAV") of $1.00 per share. The Portfolio seeks to maximize current income to the extent consistent with the preservation of capital and maintenance of liquidity by investing exclusively in high quality money market instruments."
It adds, "The Portfolio seeks to achieve its objective by investing in a broad range of high-quality, U.S. dollar-denominated government, bank and commercial obligations that are available in the money markets, including: Obligations of U.S. banks (including obligations of foreign branches of such banks); Obligations of foreign commercial banks; Commercial paper and other obligations issued or guaranteed by U.S. and foreign corporations and other issuers; Corporate bonds, notes, paper and other instruments that are of high quality; Asset-backed securities and asset-backed commercial paper; Securities issued or guaranteed as to principal and interest by the U.S. government or by its agencies, instrumentalities or sponsored enterprises and custodial receipts with respect thereto; Securities issued or guaranteed by one or more foreign governments or political subdivisions, agencies or instrumentalities; Repurchase agreements; and Municipal securities issued or guaranteed by state or local governmental bodies."
The U.S. Government Select Portfolio "is a money market fund that seeks to maintain a stable net asset value ("NAV") of $1.00 per share. The Portfolio seeks to maximize current income to the extent consistent with the preservation of capital and maintenance of liquidity by investing exclusively in high quality money market instruments. The Portfolio seeks to achieve its objective by investing, under normal circumstances, substantially all (and at least 80%) of its net assets in securities issued or guaranteed as to principal and interest by the U.S. government or by its agencies, instrumentalities or sponsored enterprises.... The Portfolio makes significant investments in securities issued by U.S. government-sponsored entities. Such securities are neither issued nor guaranteed by the U.S. Treasury."
No doubt there be more changes in the coming months and leading up the implementation of the SEC money market reforms on October 14, 2016. Five years ago on Sept 1, 2009, Crane Data tracked 85 fund families with money funds, 3 years ago on Sept. 1, Crane tracked 78 fund families, and today we track 74 fund families. For our last story on fund liquidations and consolidation, read our June 27, 2013, News, "More MFs Liquidate: Calvert, Hartford Exit; Bad Timing for Bond Funds."
