Deutsche Asset & Wealth Management is shifting the vast majority of its Prime money market funds to Government funds as part of its money fund reform reorganization plans, the company announced Monday in a press release entitled, "Deutsche Asset & Wealth Management Announces Intended Plans for Money Market Fund Reform." In short, Deutsche will convert 5 Prime Institutional portfolios into Government funds, including Cash Management Fund; Cash Reserves Fund Institutional; Deutsche Money Market Series; Deutsche Money Market VIP; and Prime Series of Cash Reserve Fund, Inc. It will keep just one Prime Institutional Fund, the $113 million Deutsche Variable NAV Money Market Fund. Deutsche is the 18th largest money market fund manager with $31.2 billion in assets, and $55.8 billion in global MMF assets. It will also offer Retail funds, Separately Managed Accounts, and is considering new products as well.
The release explains, "Deutsche Asset & Wealth Management (Deutsche AWM) today announced its intended plans to ensure that Deutsche Money Market Funds are fully compliant with the new regulations adopted by the Securities and Exchange Commission (SEC) with regard to money market funds ahead of the compliance date of October 2016. As a leading asset and wealth manager and provider of liquidity management services, Deutsche AWM plans to offer a full array of money market funds for both institutional and retail investors that comply with the amendments to Rule 2a-7. In addition, Deutsche will continue to offer customized separate account and insured deposit capabilities."
Joe Benevento, Head of Cash Management for Deutsche AWM, comments, "We are proud to continue our legacy as an industry leader and fiduciary for our clients in liquidity management, and we expect that regulatory reform will also create client demand for additional innovative services.... We are committed to our investment process and will continue to work with our clients to discuss their individual needs and seek solutions to help them."
The Deutsche release continues, "As part of its overall plan, Deutsche AWM will continue to offer the Deutsche Variable NAV Fund, which was launched in 2011. The fund operates as a money market fund in compliance with Rule 2a-7 and provides institutional investors with daily liquidity while valuing its portfolio securities using market based factors. This floating NAV prime fund has a track record of over four years. Deutsche AWM was a pioneer in developing and building experience operating a same day liquidity floating NAV money fund."
The company provided further details in an accompanying release, "Deutsche AWM Money Market Fund Reform Update." It says, "Deutsche Asset & Wealth Management (Deutsche AWM) is working closely with the Board of the Deutsche Money Market Funds to ensure that our money market funds are fully compliant with the amendments ahead of the final compliance date of October 14, 2016."
The Update tells us, "Deutsche AWM expects to offer the following 6 investment solutions for cash investors: 1. Institutional Prime Money Market Funds: Deutsche AWM will continue to offer the Deutsche Variable NAV Money Fund.... 2. Government Money Market Funds: Deutsche AWM currently offers two funds that invest exclusively in government securities: (i) Treasury Portfolio, a series of Investors Cash Trust; and (ii) Government & Agency Securities Portfolio, a series of Cash Account Trust. Deutsche AWM plans for each of these two funds to continue to operate as a "government money market fund" under amended Rule 2a-7."
On the Prime to Government conversions, it says, "In addition to the funds listed above, Deutsche AWM recommended, and the Board of each fund approved, subject to shareholder approval, that the following prime funds revise their investment policies and operate as government money market funds ... prior to October 14, 2016: Cash Management Fund; Cash Reserves Fund Institutional; Deutsche Money Market Series; Deutsche Money Market VIP; and Prime Series of Cash Reserve Fund, Inc. Additionally, the Deutsche government money market funds currently do not intend to impose liquidity fees or gates. If a government money market fund were to elect to have the ability to implement liquidity fees or gates in the future, the fund would provide shareholders with prior notice."
Deutsche's potential solutions also include: "3. Retail Money Market Funds: Prior to October 14, 2016, Deutsche AWM plans to offer the following retail money market funds: Deutsche Money Market Prime Series; Tax-Exempt Portfolio, a series of Cash Account Trust; and Tax Free Money Fund Investment. These funds intend to adopt policies and procedures reasonably designed to ensure that only natural persons are invested in the fund. As prime or tax-exempt, these funds will be required to have the ability to implement liquidity fees and gates under certain circumstances by October 14, 2016."
They continue, "4. Separately Managed Accounts (SMA): As part of our holistic approach to meeting the unique investment needs of cash investors, Deutsche AWM will continue to leverage the strength of its broad global investment platform to offer customized solutions (i.e. SMAs) to clients that typically have known time horizons, risk tolerances and targets for yield and liquidity. This service is typically suitable for certain institutional and high net worth investors for cash that they would consider core."
Deutsche adds, "5. Deutsche Bank Insured Deposit Program (IDP): Deutsche AWM will continue offering the IDP as a means of aligning intermediaries and depository institutions while serving as a complement to an investor's liquidity needs. The IDP enables financial intermediaries to provide individuals, municipalities and corporations the benefit of extended FDIC insurance. Leveraging our proprietary deposit management system, the program provides financial intermediaries with a capital efficient means to deliver pass-thru deposit insurance for all clients -- regardless of account type -- while creating a stable, diverse and cost-effective deposit base for a growing network of member banks."
Finally, the list of solutions includes: "6. New Solutions and Services: We expect that the amendments to Rule 2a-7 and other regulatory changes will create client demand for new and innovative services. We continue to work with our clients to discuss their needs and design solutions to address them."
