It's been a month since we've seen any major announcements from money market fund managers on reform-related changes, but there have been a flurry of smaller moves, including liquidations, name changes, share class launches, and changes in investment guidelines. While there have been a couple of minor announcements -- see our Sept. 10 News, "More Consolidation: Federated Buys Huntington; Am Century Goes Govt -- the last big news we saw was Sept. 1, "Franklin Goes Government; $200 Billion To-Date to Convert from Prime." Among the latest set of tweaks: PNC merged two government funds, Dreyfus initiated a number of name changes, and Fidelity provided an update on some of its already announced money market fund mergers. Also, as expected (see our July 29 News, "American Funds Leans Government"), American Funds filed to convert its American Funds Money Market Fund to a Government money fund.
The $12 billion American Funds Money Market Fund will convert to American Funds US Government MMF. The SEC filing states, "In July 2014, the U.S. Securities and Exchange Commission announced revisions to the rules governing money market funds. Under the revised rules, government money market funds and retail prime money market funds can continue to maintain a stable net asset value per share, while tax-exempt and institutional prime money market funds will be required to float their net asset values. During times of stress, redemption gates and liquidity fees could be imposed on all non-government money market funds at the discretion of the fund's board. Government money market funds will be excluded from this requirement but can opt in with proper notice to investors."
The American Funds Money Market Fund Prospectus Supplement continues, "In order to qualify as a government money market fund, the fund must invest at least 99.5% of its assets in government securities, cash or repurchase agreements backed by government securities. The fund has historically invested between 85% and 90% of its assets in qualifying government securities; as a result, the fund's Board of Trustees has approved a proposal to formally establish the fund as a government money market fund and, relatedly, to increase the allocation of government securities in the fund's portfolio to 99.5%. As a government money market fund, the fund will seek to maintain a stable $1.00 net asset value and will not implement redemption gates and liquidity fees. The fund's investment adviser expects this change to go into effect on or about April 1, 2016. Accordingly, effective on or about April 1, 2016, the fund also expects to change its name to American Funds U.S. Government Money Market Fund."
PNC's liquidation/merger filing says, "The Boards of Trustees of PNC Funds and PNC Advantage Funds approved an Agreement and Plan of Reorganization pursuant to which PNC Advantage Institutional Government Money Market Fund (the "Target Fund") would be reorganized with and into PNC Government Money Market Fund (the "Acquiring Fund"). Upon completion of the Reorganization, Institutional Class shareholders of the Target Fund will become Class I shareholders of the Acquiring Fund, and Advisor Class shareholders of the Target Fund will become Advisor Class shareholders of the Acquiring Fund. Both Funds are managed by PNC Capital Advisors, LLC."
It adds, "The Target Fund and Acquiring Fund have substantially similar investment objectives and their principal investment strategies are identical. The expense ratios borne by shareholders of the Target Fund are expected to remain the same or to be reduced modestly." According to our Money Fund Intelligence XLS, the merged PNC Advantage Institutional Government Money Market portfolio had $90 million in assets, while PNC Government Money Market portfolio has $1.4 billion.
Also in our pending MFI XLS, Dreyfus is changing the names of several money market funds. Dreyfus Institutional Reserves Treasury will become Dreyfus Institutional Treasury and Agency Cash Advantage (Agency, Classic, Hamilton, Inst and Premier shares are all changing); Dreyfus Inst Reserve Treasury Premier will become Dreyfus Institutional Treasury Premier Cash Advantage; and Dreyfus US Treasury Reserves will become Dreyfus General Treasury and Agency Money Market.
We also reported last month that Dreyfus liquidated its Dreyfus Basic Municipal Money Market Fund, and the manager will liquidate its Dreyfus Basic New York Municipal MMF and Dreyfus New York AMT-Free Municipal MMF on Oct. 28, 2015. Dreyfus AMT-Free Municipal Reserves was also renamed Dreyfus General AMT-Free Municipal MMF. See our Sept. 7 Link of the Day," "Forward Funds Liquidates US Govt MMF; Eaton Vance Liquidating US Govt MMF," and see our Aug. 17 News, "Another Muni Money Fund Liquidates: A Recap of Recent Expirations." See also, Thursday's LOTD, which reported that Goldman Sachs Financial Square Federal Fund changed its name to Goldman Sachs Financial Square Treasury Solutions Fund on Oct. 1, 2015.
Finally, Fidelity recently provided another update to advisors on some previously announced fund mergers. (See our April 14 News, "Fidelity Operational Update Details More Changes; Alpine Liquidates" for a full recap.) The new communication is entitled, "Important Fidelity Money Market Fund Soft Closings and Merger Information," says, "Please be advised, the following funds are scheduled to merge throughout the month of November 2015: Select Money Market (FSLXX) into Fidelity Money Market Premium Class (FZDXX); CMF Prime: Daily Money Class (FDAXX) into Fidelity Government Money Market: Daily Money Class (FZBXX); CMF Prime: Capital Reserves Class (FPRXX) into Fidelity Government MM: Capital Reserves Class (FZAXX); and US Government Reserves (FGRXX) into Fidelity Government MM: Premium Class (FZCXX)."
Previous News stories on major fund changes include: Aug. 21, "T Rowe Price to Launch Prime Inst MMF," July 31 "BlackRock to Liquidate 3 Muni MMFs, Convert Old Merrill Primes to Govt," July 21, "Deutsche Announces Reform Plans, Will Convert Most Prime MFs to Govt," and, the one that started it all, Feb. 2, "Fidelity Announces Major Changes to MMFs; Staying Stable, Going Govt." To date, we count about $205 billion worth of Prime funds converting to Government funds.
