Goldman Sachs Asset Management announced significant changes to its money market fund lineup yesterday, including the launch of new funds. Goldman, the seventh largest money fund manager in the US with $145.6 billion, was the first company to respond to the SEC reforms when it announced back in January that it would comply early with the new definition of Government MMFs. (See our Jan. 22 "News", "Goldman Govt Funds Comply Early; Invesco on Gates/Fees; Champ Exits.") But this new press release, "Goldman Sachs Asset Management Increases Focus on Advanced Compliance with Money Market Fund Rules," goes much deeper, announcing the launch of a new Prime Retail fund, the conversion of a Prime fund to a Government fund, the repositioning of a Government fund to a Treasury fund, and the launch of a new Government fund. (For a recap of all of the changes that have taken place through mid-July, see our recent story, "Managers Rolling with Reform Changes; Recap of Announcements So Far.")
The release says, "Goldman Sachs Asset Management ("GSAM") today announced a series of further steps to assist clients in preparing for the Securities and Exchange Commission's ("SEC's") money market fund requirements under amended Rule 2a-7, scheduled to go effective in October 2016. This follows GSAM's announcement in January 2015 stating that its U.S. government money market funds will continue to operate in accordance with the new definition of "government money market fund" established by the SEC in July 2014."
Dave Fishman, Managing Director and Co-Head of Global Liquidity Management, comments, "To inform its most recent product updates, GSAM has gathered feedback and insight from our clients and vendors. `This insight has helped us shape a series of solutions designed to help clients prepare for regulatory reform, streamline their operations, manage risk and make informed investment decisions."
GSAM filed with the SEC to make the following changes. One, "The launch of a new retail prime fund: The Goldman Sachs Investor Money Market Fund will be a "retail money market fund," as defined by amended Rule 2a-7. The new Fund will invest across the entire money market fund universe, including in securities issued or guaranteed by U.S. government agencies or instrumentalities, obligations of banks, commercial paper and other short-term obligations of U.S. companies, states, and municipalities and other entities and repurchase agreements. Under amended Rule 2a-7, retail money market funds are permitted to maintain a stable net asset value ("NAV") of $1.00 per share, and are only available to investors who are natural persons. The Fund will have the same pricing structure as GSAM’s Financial Square Money Market Funds."
Two, "The repositioning of the Goldman Sachs VIT Government Money Market Fund: In response to demand from insurance investors, GSAM plans to convert the Goldman Sachs Variable Insurance Trust ("VIT") Money Market Fund from a prime fund to a "government money market fund" as defined by amended Rule 2a-7. The Fund will be renamed the Goldman Sachs VIT Government Money Market Fund, and will pursue its investment objective by investing only in "government securities." These changes do not require any shareholder action."
Three, "The launch of a new government money market fund: The Goldman Sachs Financial Square Federal Instruments Fund intends to be a "government money market fund" as defined by amended Rule 2a-7. The Fund will seek to maintain a stable NAV of $1.00 per share, and complete GSAM's current suite of government money market mutual funds. GSAM believes this Fund will be best suited for investors who are primarily concerned with state tax exempt income."
Four, "The repositioning of a current government money market fund: The Goldman Sachs Financial Square Federal Fund currently invests in securities issued or guaranteed by the United States, including U.S. Treasury securities, certain U.S. government agencies or instrumentalities and repurchase agreements solely with the Federal Reserve Bank of New York. Effective September 30, 2015, the Fund will be renamed the Goldman Sachs Financial Square Treasury Solutions Fund. The Fund will invest in U.S. Treasury securities, and enter into repurchase agreements solely with the Federal Reserve Bank of New York. This Fund is designed to be a product alternative for "Treasury-only" investors concerned with market capacity constraints."
Further, the release says, "In addition to the changes listed above, GSAM's Global Liquidity Services Portal has been updated to handle fluctuating, same-day settling money funds that price multiple times per day and also supports automated transactions, settlement and custom reporting, all designed to reduce operational complexities." "We have been enhancing our Global Liquidity Services Portal functionality to help guide investors through investment decision making in the new world, and help identify investments that best fit their needs," explains Kathleen Hughes, Managing Director and Head of the Global Liquidity Sales team.
Goldman continues, "Furthermore, GSAM continues to evaluate the implementation requirements' impact to clients, and is still finalizing its plan for GSAM's prime and tax-exempt money market funds. GSAM anticipates announcing its final plans by the end of 2015." "GSAM's evolving liquidity lineup is the latest in our continued effort to help liquidity investors navigate through the changing regulatory landscape. We will continue to evolve in this space and you can expect future product launches in line with client needs," says `James McNamara, Managing Director and President of Goldman Sachs Mutual Funds.
Goldman Sachs AM has made several announcements regarding compliance with the new SEC rules. The release explains, "In January 2013, GSAM became the first U.S. asset manager to begin disclosing a daily market value NAV for its U.S.-domiciled Commercial Paper Money Market funds.... In October 2013, the firm launched the Transparency Insight Tool on its Global Liquidity Services Portal. This tool combines data-rich views of fund holdings with industry-leading analytics to help investors consider their risk exposure in the same way as GSAM's MMF managers evaluate funds. GSAM continues to improve features on this online platform, including the October 2014 addition of the "Fund Tracker" feature, which offers functionality to help monitor fluctuating NAVs and liquidity levels, among other metrics. Other features include research material written by GSAM experts and real-time portfolio notifications."
Finally, the release adds, "GSAM began early compliance with Rule 2a-7 in January 2014, when the Goldman Sachs Funds' Board of Trustees approved changes to allocations within four funds. Funds affected at that time were: the Goldman Sachs Financial Square Government Fund; Goldman Sachs Financial Square Federal Fund; Goldman Sachs Financial Square Treasury Obligations Fund; and Goldman Sachs Financial Square Treasury Instruments Fund. On July 14, 2015, GSAM met the first compliance deadline for Rule 2a-7 changes announced in July 2014, the requirement that money market funds be able to file Form N-CR within one business day of certain events, such as changes in fund price, the provision of financial support to a fund and the imposition of a liquidity fee or suspension of fund redemptions."
