Vanguard became the latest money fund manager to announce changes to its fund lineup in response to the new regulations, and the first to decline to offer institutional floating rate Prime or municipal money funds. Vanguard, the fifth largest money market fund manager with $173 billion in assets, issued a press release Tuesday entitled, "Vanguard To Designate Prime And Tax-Exempt Money Market Funds For Individuals." Among the changes, the $133 billion Vanguard Prime MMF will be designated a retail fund with the Institutional Shares of Prime MMF being changed to Admiral Shares. It also reopened the Federal MMF to new investors. The release says, "Vanguard today announced plans for its money market mutual fund lineup that will enable individual and institutional investors to continue to have access to cash management vehicles at a stable $1 net asset value (NAV). The moves are in response to rules adopted by the Securities and Exchange Commission (SEC) in 2014, the last compliance date for which is in October 2016."
It continues, "We are pleased to preserve Vanguard's money market funds as a stable-price cash management option for our individual and institutional clients," says Vanguard CEO Bill McNabb. "Our retail clients will continue to have the choice to invest in our taxable and tax-exempt money market funds, and all investors, including institutional clients, will be able to invest in our newly reopened Federal Money Market Fund."
Further, the release says, "Vanguard plans to designate its $133.4 billion Prime Money Market Fund and its six tax-exempt funds (one national and five state municipal money funds) as "retail funds," meaning that individual investors will continue to have access to these funds at a stable $1NAV. In addition, Vanguard announced two name changes, effective December 2015: Institutional Shares of Vanguard Prime Money Market Fund (ticker symbol: VMRXX) will be renamed Admiral Shares. Vanguard Admiral Treasury Money Market Fund (ticker symbol: VUSXX) will be renamed Vanguard Treasury Money Market Fund.
Also, it explains, "Vanguard is reopening its $2.8 billion Federal Money Market Fund immediately. All investors, including institutional investors, will now have access to a money fund with a stable $1 NAV that will not be subject to new liquidity-fee or redemption-gate requirements. Under the new rules, the SEC has defined U.S. government money funds as those that invest at least 99.5% (formerly 80%) of their total assets in cash, government securities, and/or repurchase agreements that are collateralized solely by government securities or cash. Such funds are excluded from the floating NAV requirements, as well as the new fee and gate requirements."
Vanguard adds, "The Federal Money Market Fund and the $9.6 billion Treasury Money Market Fund currently invest more than 99.5% of their total assets in U.S. government securities or repurchase agreements, and plans to operate in accordance with the new definition of a government money market fund. The Treasury Money Market Fund will remain closed to new investors."
It concludes, "Money funds continue to play an important role for Vanguard clients, providing a high-quality, liquid investment (the funds invest in highly rated short-term investments) in periods of both stability and uncertainty in financial markets. Vanguard has managed money funds for 40 years as an integral part of its product lineup, and currently holds more than $174 billion in both taxable and tax-exempt money market funds."
With this news, all 5 of the largest money market fund managers, and 9 of the top 10, have released statements concerning their future money fund lineups under the pending reforms. Only the 9th largest MMF manager, Morgan Stanley, has yet to release a statement. Among the top 20, only Northern, BofA, Deutsche, Franklin, and American have not made announcements.
