State Street filed with the Securities & Exchange Commission last week to launch 3 new money market funds and 3 new ultra-short, "enhanced cash" bond funds, we first learned from mutual fund publication, ignites. A search of the SEC EDGAR database filings shows that State Street Institutional Investment Trust filed Form N-1A Registration Statements on July 15 for the new State Street 60 Day Money Market Fund, State Street Institutional Liquid Assets Fund, and State Street Cash Reserves Fund. The 3 new bond funds are State Street Ultra Short Term Bond Fund, State Street Current Yield Fund, and State Street Conservative Income Fund." (See also our recent "News" articles, June 15 "SSgA Says State Street ILR Will Float, Defends Gates, Fees," and June 19 "SSgA White Paper Calls for Cash Bucketing, Short-Duration Bond Funds.")
The filing for State Street 60 Day Money Market Fund says, "Although the Fund is a money market fund, the net asset value ("NAV") of the Fund's shares will "float," fluctuating with changes in the values of the Fund's portfolio securities. The Fund typically accepts purchase and redemption orders multiple times per day, and calculates its NAV at each such time. The Fund attempts to meet its investment objective by investing primarily in a broad range of short-term, high credit quality money market instruments. Under normal circumstances the Fund invests at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in instruments with remaining maturities of 60 days or less."
State Street Institutional Liquid Assets Fund's filing explains, "Although the Fund is a money market fund, the net asset value ("NAV") of the Fund's shares will "float," fluctuating with changes in the values of the Fund's portfolio securities. The Fund typically accepts purchase and redemption orders multiple times per day, and calculates its NAV at each such time. The Fund attempts to meet its investment objective by investing in a broad range of money market instruments. These may include U.S. Government securities (including U.S. Treasury bills, notes and bonds and other securities issued or guaranteed as to principal or interest, as applicable, by the U.S. government or its agencies or instrumentalities); certificates of deposit and time deposits of U.S. and foreign banks; commercial paper and other high quality obligations of U.S. or foreign companies; asset-backed securities, including asset backed commercial paper; mortgage-related securities; and repurchase agreements. These instruments may bear fixed, variable or floating rates of interest or may be zero-coupon securities." The fund will have the following share classes: Premier (0.12% expense ratio), Institutional (0.15%), Investor (0.20%), Administration (0.37%), and Investment (0.47%).
The filing for the retail State Street Cash Reserves Fund says, "The Fund is a money market fund and seeks to maintain its net asset value ("NAV") at $1.00 per share, although there can be no assurance that it will be able to do so. The Fund attempts to meet its investment objective by investing in a broad range of money market instruments. These may include U.S. Government securities (including U.S. Treasury bills, notes and bonds and other securities issued or guaranteed as to principal or interest, as applicable, by the U.S. government or its agencies or instrumentalities); certificates of deposit and time deposits of U.S. and foreign banks; commercial paper and other high quality obligations of U.S. or foreign companies; asset-backed securities, including asset backed commercial paper; mortgage-related securities; and repurchase agreements. These instruments may bear fixed, variable or floating rates of interest or may be zero-coupon securities."
State Street Ultra Short Term Bond Fund's new filing explains, "The State Street Ultra Short Term Bond Fund seeks to achieve its investment objective by investing in a diversified portfolio of U.S. dollar denominated, investment grade fixed income securities. Under normal circumstances, the average effective duration of the Fund is expected to be one year or less. Effective duration is a measure of the expected sensitivity of market price of an investment to changes in interest rates, taking into account the anticipated effects of structural complexities (for example, some bonds can be prepaid by the issuer). Generally, the longer a portfolio's duration, the more sensitive its value will be to changes in interest rates." The fund will offer Institutional shares at a 0.35% expense ratio and Investment with 0.67% in expenses.
The filing for the new State Street Current Yield Fund, which appears to be a bond fund run like a money fund (but not an MMF), says, "The State Street Current Yield Fund seeks its investment objective by investing in investment grade quality, short-term instruments. The Fund invests in many of the types of instruments in which a money market fund may invest, but without many of the same credit and other limitations that apply to a money market fund. The Fund is not a money market fund, and its net asset value per share will fluctuate. Under normal circumstances the Fund pursues its investment objective by investing in instruments with a remaining maturity of 90 days or less. These may typically include U.S. Government securities (including U.S. Treasury bills, notes and bonds and other securities issued or guaranteed as to principal or interest, as applicable, by the U.S. government or its agencies or instrumentalities); certificates of deposit and time deposits of U.S. and foreign banks; commercial paper and other high quality obligations of U.S. or foreign companies; municipal commercial paper; asset backed commercial paper; and repurchase agreements. All of the Fund's investments will be denominated in the U.S. dollar."
Finally, State Street Conservative Income Fund's filing says, "The State Street Conservative Income Fund seeks its investment objective by investing principally in debt instruments. The Fund invests in many of the types of instruments in which a money market fund may invest, but without many of the same credit, maturity, and other limitations that apply to a money market fund. The Fund is not a money market fund, and its net asset value per share will fluctuate. The Fund's investments may include among other things U.S. Government securities (including U.S. Treasury bills, notes and bonds and other securities issued or guaranteed as to principal or interest, as applicable, by the U.S. government or its agencies or instrumentalities); certificates of deposit and time deposits of U.S. and foreign banks; commercial paper and other high quality obligations of U.S. or foreign companies; municipal securities; asset backed commercial paper; and repurchase agreements. All of the Fund's investments will be denominated in the U.S. dollar. The Fund intends to limit its weighted average maturity (taking into account interest rate adjustments) to 90 days and its weighted average life (maturity without regard to interest rate readjustments) to 250 days. The Fund will not purchase securities with more than 2 years to maturity."
In other news, ignites wrote early last week, "Bents Sue Reich & Tang for $80M Over Deal Gone Bad." The story says, "Three years after being cleared of fraud charges leveled by the SEC over their management of the failed Reserve Primary money market fund, Bruce Bent and his son are back in court. But this time the Bents are the plaintiffs, accusing Natixis affiliate Reich & Tang of failing to make royalty payments on the FDIC-insured cash management business it bought from them in 2011 . Two companies run by the father and son -- Double Rock Corp. and Island Intellectual Property -- have sued Reich & Tang in New York Supreme Court for breach of contract and more than $80 million in damages. The Bents also claim that Reich & Tang "fraudulently induced" the sale of their cash management business for "a fraction of the true value" by promising that the firm would make periodic payments for licensing patents held by Island Intellectual Property and then failing to do so."
The ignites piece adds, "Bent Sr. is known as the inventor of money market funds, and both men are known for their role in the 2008 collapse of the Reserve Primary Fund, which broke the buck at the height of the financial crisis. The SEC alleged that the two executives lied to investors, independent trustees and rating agencies about their intentions of supporting the Primary Fund amid redemptions in September 2008. A jury cleared the Bents of fraud in 2012." In April of this year, Reich & Tang sold their money fund business to Federated.
