A press release posted Friday entitled, "Goldman Sachs Asset Management Announces Additional Updates to Money Market Fund Product Line in Anticipation of New Regulatory Requirements," is the latest announcement to detail money market mutual fund changes ahead of next year's regulatory reforms. It says, "Goldman Sachs Asset Management today announced further updates in its money market fund product line to prepare clients for the Securities and Exchange Commission's Rule 2a-7 amendments, which become effective in October 2016." (Note: Watch Tuesday for an update on several new firms "going Government," exiting the Prime space and converting to government money funds.)
Dave Fishman, Goldman Managing Director and Co-Head of Global Liquidity Management, says, "We are committed to making sure our clients and partners understand the new requirements so they can make an informed decision on how best to proceed with their investments in 2016. We continue to engage with them on how to best support their evolving investment needs and will continue to make updates as needed."
Friday's announcement features several changes, including the designation of two existing prime money market funds as institutional. The release says, "The Goldman Sachs Financial Square Money Market Fund ($37.8 billion in AUM) and the Goldman Sachs Financial Square Prime Obligations Fund ($13.2 billion in AUM) plan to operate as "institutional money market funds" (as defined by amended Rule 2a-7) by the regulatory deadline of October 14, 2016. The Funds will comply with floating NAV and liquidity fees and redemption gates requirements upon their transition."
GSAM is also repositioning of an existing prime money market fund. It explains, "Pursuant to a filing with the SEC on November 24, 2015, the Goldman Sachs Financial Square Prime Obligations Fund will expand its investment guidelines as of December 29, 2015 to invest in U.S. dollar-denominated obligations of foreign issuers, though the Fund does not intend to purchase U.S. dollar-denominated Euro certificates of deposit."
Also, the release tells us, "The Goldman Sachs Financial Square Tax-Free Money Market Fund plans to operate as a "retail money market fund" (as defined by amended Rule 2a-7) by the regulatory deadline of October 14, 2016. Effective March 31, 2016, the Fund will be renamed the "Goldman Sachs Investor Tax-Exempt Money Market Fund." The Fund will not change its investment policies, and will continue to invest at least 80 percent in municipal obligations of U.S. states, territories and possessions. The Fund will only be available to retail investors (as set forth by the SEC's new rules) on or before October 14, 2016."
Further, they state that the firm will launch a new institutional tax-exempt money market fund. It says, "GSAM has filed an initial registration statement for the Goldman Sachs Financial Square Tax-Exempt Money Market Fund, which plans to operate as an "institutional money market fund" (as defined by amended Rule 2a-7) by the regulatory deadline of October 14, 2016. The Fund is projected to be launched on or around March 31, 2016. At least 80 percent of the Fund's net assets will be invested in municipal obligations of U.S. states, territories, and possessions. The Fund will comply with floating NAV and liquidity fees and redemption gates requirements by the regulatory deadline of October 14, 2016." (See our latest Money Fund Intelligence for the short list of Institutional Tax-Exempt money funds to date.)
In addition, GSAM will 'liquidate two tax-exempt money market funds <b:>`_. The release explains, "The Goldman Sachs Financial Square Tax-Exempt New York Fund and the Goldman Sachs Financial Square Tax-Exempt California Fund will be liquidated on or before August 31, 2016. The liquidations are based on changing investor needs and are in response to the long-term investment environment."
James McNamara, Managing Director and President of Goldman Sachs Mutual Funds, comments, "We've come to these decisions on the current product line after careful consideration about the impacts to and preferences of our clients. More changes will be necessary as the regulatory landscape evolves and we will continue to ensure future modifications and product launches meet the expectations of the clients we serve."
In the release, GSAM outlines what its future money market fund lineup will look like. Government Funds include: Goldman Sachs FS Government Fund, GS FS Federal Instruments Fund, GS FS Treasury Solutions Fund, GS FS Treasury Obligations Fund, GS FS Treasury Instruments Fund, and GS VIT Government Money Market Fund; Prime Institutional Funds include: GS FS Money Market Fund and GS FS Prime Obligations Fund; Prime Retail Funds: GS Investor Money Market Fund; Tax-Exempt Institutional Funds: GS FS Tax-Exempt MMF; and, Tax-Exempt Retail: GS Investor Tax-Exempt Money Market Fund.
The release goes on, "In addition, GSAM's Global Liquidity Services Portal has been enhanced with functionality aimed at reducing the new operational and risk management challenges clients may face as a result of changing money market fund features. These enhancements will provide clients with critical insights into fund positioning and potential risks as well as daily tracking of fund prices, liquidity levels and shareholder flows. The GSAM's Global Liquidity Services Portal allows investors to analyze, track and trade GSAM money market funds as well as a broad array of money market funds from other providers." "Further updates to our Global Liquidity Services Portal are designed to provide a more robust user experience that will help facilitate confident and informed investment decisions in a changing regulatory and market environment," said Kathleen Hughes, Managing Director and Head of the Global Liquidity Sales Team.
It continues, "In January 2014, GSAM announced early compliance with Rule 2a-7, when the Goldman Sachs government money market funds adopted the holdings requirements applicable to government funds under amended Rule 2a-7. Each of the Goldman Sachs Financial Square Government Fund; Goldman Sachs Financial Square Federal Fund (as of September 30, 2015 repositioned to the Goldman Sachs Financial Square Treasury Solutions Fund); Goldman Sachs Financial Square Treasury Obligations Fund; and Goldman Sachs Financial Square Treasury Instruments Fund committed to hold at least 99.5% of their assets in cash, U.S. Government Securities, and/or repurchase agreements that are collateralized fully."
Finally, the release says, "On July 29, 2015, GSAM announced its intention to launch a new retail prime money market fund, the Goldman Sachs Investor Money Market Fund (scheduled to launch January 29, 2016) and a new government money market fund, the Goldman Sachs Financial Square Federal Instruments Fund (launched October 30, 2015), along with the repositioning of the Goldman Sachs Variable Insurance Trust ("VIT") Money Market Fund to the Goldman Sachs VIT Government Money Market Fund (effective April 15, 2016). In the July update GSAM also announced the Goldman Sachs Financial Square Federal Fund would reposition to the Goldman Sachs Financial Square Treasury Solutions Fund, effective September 30, 2015 in response to investor concerns about capacity in the Treasury markets. The Fund provides a unique investment approach of investing only in U.S. Treasuries and repurchase agreements with the Federal Reserve Bank of New York." (For more, see our July 30 News, "Goldman Sachs to Launch New Prime Retail, Treasury Fed RRP Funds.")
