Federated Investors, the fourth largest money fund manager, announced that it is acquiring the money market fund assets of Huntington Asset Advisors, the 43rd largest money fund family with about $1.1 billion. This is the third money market fund acquisition that Federated has made this year, following the purchase of Reich & Tang's MMF business back in April, and the acquisition of the Touchstone Ohio Tax Free MMF in March. As many predicted, money market fund reforms are leading to consolidation within the money fund spaces as small firms exit the space rather than deal with the new regulations. Earlier this week we also reported on two other small shops getting out of the money fund business, Eaton Vance and Forward Funds. After these new departures, Crane Data will track 67 money fund managers, down from 75 in July 2014. In other news, American Century filed with the SEC to convert its $1.4 billion American Century Premium MMF to a Government fund.
The press release, entitled, "Federated Investors' Money Market Funds to Acquire Approximately $1.1 Billion in Assets from Huntington Money Market Funds," says, "Federated Investors, Inc., one of the nation's largest investment managers, today announced that it has reached a definitive agreement with Huntington Asset Advisors, Inc. and The Huntington National Bank for the acquisition by Federated of certain assets of Huntington Asset Advisors relating to its management of two money market funds. In connection with the proposed acquisition, approximately $1.1 billion of Huntington money market fund assets would be transitioned to two Federated money market funds with comparable investment objectives and strategies."
Federated explains, "In relation to the transition of money fund assets, approximately $236 million in prime money market assets will be reorganized from the Huntington Money Market Fund into Federated Prime Cash Obligations Fund, and approximately $870 million will be reorganized from the Huntington U.S. Treasury Money Market Fund into Federated Treasury Obligations Fund."
J. Christopher Donahue, Federated's president and CEO, comments, "As a leading provider of liquidity-management services, Federated regularly works with organizations of many types and sizes to find the best solutions for their cash-management needs. The acquisition builds on Federated's long-term relationship with Huntington by providing current Huntington liquidity-management clients access to Federated's experienced money managers and proven credit process."
The company adds, "Federated's board of directors and the board of trustees of the Federated mutual funds and The Huntington Funds board of trustees have approved the transaction. The reorganizations are expected to be tax free and are anticipated to be completed in the fourth quarter of 2015. The completion of the transactions [are] subject to shareholder approval and certain other contingencies. The financial terms of the agreement were not disclosed. Federated Investors, Inc. is one of the largest investment managers in the United States, managing $349.7 billion in assets as of June 30, 2015."
In our September 7 Link of the Day, "Forwards Funds Liquidates US Govt MMF; Eaton Vance Liquidating US Govt MMF," we reported on two other firms exiting the money fund business. Forward Funds is liquidating its only fund, Forward US Government Money Market Fund. The SEC filing says, "On June 9, 2015, the Board of Trustees of Forward Funds, including all of the Trustees who are not "interested persons" of the Trust (as that term is defined in the Investment Company Act of 1940, as amended), approved the liquidation of the Forward U.S. Government Money Fund, a series of the Trust. The Fund will be liquidated pursuant to a Board-approved Plan of Liquidation on or around August 26, 2015."
We also learned from MutualFundWire.com that Eaton Vance will liquidate its Eaton Vance U.S. Government Money Fund. Its filing says, "Eaton Vance U.S. Government Money Market Fund is no longer offered for sale or exchange and the Fund will be liquidated on or about October 29, 2015." Also, Dreyfus recently liquidated its Dreyfus Basic Municipal Money Market Fund, and reported that its $95 million Dreyfus Basic New York Municipal MMF and the $92 million Dreyfus New York AMT-Free Municipal MMF will be liquidated on October 28, 2015. (See also our story from August 17, "Another Muni Money Fund Liquidates: A Recap of Recent Expirations.")
Earlier this year, Touchstone exiting the MMF space, selling most of its assets to Dreyfus, as we detailed in the story from March 5, "Touchstone Rescinds Liquidations, Moves to Dreyfus; MFS Goes Govt ." (Touchstone sold all of its assets to Dreyfus except the Ohio Tax Free MMF, which it sold to Federated. We also reported on Reich & Tang selling its MMF assets to Federated. Also, in April Alpine liquidated its only fund, the $90 million Alpine Municipal Money Market Fund, effectively exiting the MMF space.
In other news, American Century, the 29th largest MMF manager, is converting its $1.4 billion Premium Money Market Fund to a government fund, the US Government Money Market Fund. A recent SEC filing says, "On June 16, 2015, the Board of Trustees of American Century Investment Trust approved changes to the Premium Money Market Fund's (the "fund") fundamental concentration policy and investment objective. Both changes require shareholder approval. A special meeting of shareholders of the fund will be held at 10:00 a.m. Central Time on October 5, 2015 at 4500 Main Street, Kansas City, Missouri 64111 to consider the following proposals: 1. To approve a change in the fund's concentration policy so that the fund "may not concentrate its investments in securities of issuers in a particular industry (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities); and 2.To approve a change in the fund's investment objective to "the fund seeks current income while maintaining liquidity and preserving capital."
The filing continues, "Last year, the Securities and Exchange Commission approved new rules that impact money market funds. To comply, the Board proposes converting the fund into a government money market fund. Conversion will allow the fund to continue seeking to maintain a stable net asset value ("NAV"), operate without imposing liquidity fees or suspending shareholder redemptions (also known as a redemption gate), and permit all current fund shareholders to continue investing in the fund. A government money market fund must invest at least 99.5% of its assets in cash, government securities, and/or fully collateralized repurchase agreements. Currently, the fund concentrates its investments in securities of issuers in the financial services industry. These types of investments do not qualify as government securities, so the fund will no longer be able to hold them. Changing the concentration policy will allow the fund to comply with the new definition of a government money market fund."
It concludes, "Assuming that shareholders approve the proposals, we currently expect to complete the conversion by December 1, 2015. Pending shareholder approval, the fund currently intends to change its name to "U.S. Government Money Market Fund"." It's worth noting that there was no similar filing related to converting the $1.8 billion American Century Prime Money Market Fund, so it appears American Century will continue to have a Prime offering.
