Federated Investors announced further changes to its money market fund lineup on Thursday, categorizing its retail funds and streamlining its product lineup. The press release titled, "Federated Investors, Inc. Announces Plans for Retail Money Market Funds," tells us that the company will merge 7 prime retail, government, and muni funds. The release says, "Federated Investors, Inc., one of the nation's largest investment managers, today announced further refinements to its plan to restructure the company's line of money market funds by delineating which money market funds will be classified as retail money market funds under the U.S. Securities and Exchange Commission's 2014 rules. In addition, the company announced a series of planned mergers with the aim of strengthening and streamlining its money market fund offerings. Federated expects to announce its institutional money market fund product line in the future." (Note: The June issue of our Money Fund Intelligence newsletter will be e-mailed later this morning, along with our MFI XLS and May 31, 2015 performance data.)
"While Federated's clients don't need to make any changes to their investments now, the planned adjustments to Federated's product line are the result of an active and ongoing dialogue with our large, diversified client base," said J. Christopher Donahue, president and chief executive officer. "As a leading provider of liquidity management services for 40 years, Federated continues to work with our clients in an effort to meet their liquidity needs today and in the future."
The release continues, "If all of the anticipated fund mergers are completed, Federated expects to offer the six retail prime and national municipal funds." These include: Federated Capital Reserves (currently $11.7 billion), Federated Municipal Obligations Fund ($2.3B), Federated Municipal Trust ($641M), Federated Prime Cash Obligations ($15.3B), Federated Tax-Free Obligations ($6.3B), and Federated Tax-Free MMF ($3.8B). (Note: Crane Data lists Municipal Obligations, Prime Cash Obligations, and Tax Free Obligations with both Institutional and Retail share classes, so these moves will shift dollars into retail.)
Federated explains, "The company also anticipates offering the 13 state-specific money market funds listed below as retail money market funds subject to board approval. Each of the funds named below will continue to permit institutional investors to invest in the funds until Oct. 14, 2016, when the SEC rule changes go into effect." The 13 funds include: Federated California Municipal Cash Trust ($524M), Federated New Jersey Municipal Cash Trust ($184M), Federated Connecticut Municipal Cash Trust ($109M), Federated New York Municipal Cash Trust ($825M), Federated Florida Municipal Cash Trust ($160M), Federated North Carolina Municipal Cash Trust ($189M), Federated Georgia Municipal Cash Trust ($168M), Federated Ohio Municipal Cash Trust ($318M), Federated Massachusetts Municipal Cash Trust ($231M), Federated Pennsylvania Municipal Cash Trust ($244M), Federated Michigan Municipal Cash Trust ($108M), Federated Virginia Municipal Cash Trust ($345M), and Federated Minnesota Municipal Cash Trust ($140M).
Further, they comment, "Each retail money market fund will continue to seek a stable $1.00 per share net asset value (NAV). Retail money market mutual funds are defined by the 2014 money market fund rules as funds that have policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons. Generally, individuals may continue to invest in retail money market funds through their brokerage account, retirement accounts, education and savings accounts, as well as through ordinary trusts. Federated Automated Cash Management Trust, Federated Prime Cash Series and Federated Municipal Cash Series are expected to be merged into other retail money market funds before the deadline to designate a fund as retail or institutional."
Federated adds, "In an effort to strengthen and streamline its retail money market fund offerings, Federated plans a series of fund mergers for certain prime, municipal and government money market funds. The three retail and four government money market funds listed below are expected to be merged into designated retail and government money market funds with similar investment objectives and principal investment strategies. Federated began notifying its money market fund shareholders of the planned mergers on June 3, 2015. Pending any required approvals, the company expects the mergers to be completed in late 2015."
Specifically, Federated Automated Cash Management Trust ($1.3B) and Federated Prime Cash Series ($2.9B) will be merged into Federated Prime Cash Obligations ($15.3B). Federated Municipal Cash Series ($249M) will be merged into Federated Municipal Obligations ($2.3B). Also, Federated Treasury Cash Series ($1.6B) will be merged into Federated Trust for US Treasury Obligations ($130M), Federated Government Cash Series ($818M) will be merged into Federated Government Obligations ($26.1B), Federated Liberty US Govt ($93M) will be merged into Federated Government Reserves ($11.2B), and Federated Automated Government Cash Reserves ($230M) will be merged into Federated Government Obligations Tax Managed ($5.1B).
Finally, they say, "In addition to the mergers delineated above, in order to institute the SEC's required changes to Rule 2a-7, Federated plans to conduct a proxy of Money Market Obligations Trust, the registrant for the majority of Federated's money market mutual funds, beginning in late June. Refinements to Federated's money market fund product line will continue to evolve as market, client or regulatory changes/guidance occur before the Oct. 14, 2016, final compliance date for the 2014 money market fund rules. Certain refinements, mergers and other changes also remain subject to fund board, shareholder and other reviews or approvals. The company continues to work with institutional clients to create various institutional floating net asset value money market funds, separate accounts and private funds in an effort to better meet their liquidity needs. For additional information and future updates about Federated's liquidity products, visit FederatedInvestors.com/liquidity."
