Money market fund conversion announcements have accelerated in the final weeks of the year -- 6 additional fund managers have filed recently to change their Prime MMFs into Government funds since our last update. The recent batch of Prime to Govie conversions include: Cavanal Hill, John Hancock, Prudential, SunAmerica, Thrivent, and TIAA-CREF. These additional moves total well over $4.5 billion in assets, which brings our running conversion total to almost $262 billion in Prime to Govt fund shifts to-date. (Almost $173 billion, or 66% of the total, already converted in November and December.) We also report on Vanguard and Deutsche's renaming of Institutional share classes to Retail, on a batch of recent Federated fund mergers, and on a handful of BlackRock State Muni MMF liquidations. (See also our last "Prime-to-Govie" story, the Nov. 25 News, "OppenheimerFunds Latest MF to Go Govt," and contact us to request a copy of our "prime2govie.xls" listing of funds planning conversions.)
Cavanal Hill posted a statement on its $1.65 billion Cavanal Hill Cash Management Fund, saying, "Many investors have indicated a preference for money market funds with a stable NAV that will not be subject to liquidity fees or redemption gates, which would restrict the use of the funds. As a result, the Board of Trustees for the Cavanal Hill Funds has approved the operation of each of its Money Market Funds as either government or retail and will continue to offer shares at stable asset value, without liquidity fees or gates. Shareholder approval has been obtained, where necessary."
On the "Cavanal Hill Cash Management Fund," they say, "The Fund will become a government money market fund and will change its name to Cavanal Hill Government Securities Money Market Fund, effective April 2016. Regarding the "Cavanal Hill Tax Free Money Market Fund," they write, "The Fund will be a retail money market fund and the name of the Institutional Share Class will be changed to the Reserve Share class. The Fund will be closed to new institutional money on Jan. 1, 2016. Existing institutional shareholders will need to transition out of the Fund by April 2016."
Among the other Prime to Government conversion announcements is the $402 million John Hancock Money Market Fund, which will become John Hancock Government Money Market Fund. Its filing, says, "On December 10, 2015, the Board of Trustees approved the conversion of the fund to a government money market fund as defined under Rule 2a-7 under the Investment Company Act of 1940, effective April 6, 2016. In connection with this conversion, effective on the Conversion Date, the Principal Investment Strategies of the fund are amended and restated as follows: The fund operates as a "government money market fund" in accordance with Rule 2a-7 under the Investment Company Act of 1940."
The $672 million Prudential Money Mart Assets' filing says, "In connection with the amendments to Rule 2a-7 under the Investment Company Act of 1940, the Board of Trustees/Directors of the Fund has approved changes to the Fund's investment policies to allow the Fund to qualify and begin operating as a "government money market fund," as defined in the Amended Rule. In conjunction with these changes, the Board has also approved a name change for the Fund to "Prudential Government Money Market Fund".... It is currently expected that the changes described above will become effective on or about the end of March 2016."
Also, SunAmerica will convert the $780 million SunAmerica MMF to Government. The filing states, "At an in-person meeting held on December 1, 2015, the Board of Directors of the Fund considered the likely effects of the rule changes on the Fund and approved a proposal by the Fund's investment adviser, SunAmerica Asset Management, LLC, to convert the Fund to a government money market fund. The conversion, and the changes described in this supplement, will become effective on or about April 29, 2016. Upon the Fund's conversion to a government money market fund, the Fund will also change its name to "SunAmerica Government Money Market Fund." It is expected that the Fund gradually will allocate a larger percentage of its assets to government securities over time until it reaches its new allocation on or about April 29, 2016."
In addition, Thrivent is changing the nature of its $411 million Thrivent Money Market Fund. The filing says, "In connection with amendments to Rule 2a-7 under the Investment Company Act of 1940 -- which is the primary rule governing the operation of money market funds -- the Board of Trustees of Thrivent Money Market Fund approved changes to the Fund's principal investment strategies to allow the Fund to qualify and begin operating as a "government money market fund".... As a result, the Fund's prospectus will be amended as follows, effective February 1, 2016. The Fund's management fee ... will decrease to 0.35%."
Finally, the $667 million TIAA-CREF MMF is going government. The TIAA filing explains, "As a result of amendments to Rule 2a-7 under the Investment Company Act of 1940, as amended, the Board of Trustees of the TIAA-CREF Funds has approved a proposal for the TIAA-CREF Money Market Fund to convert to a "government money market fund," as defined in the amendments, on or before October 14, 2016 A government money market fund is not required to impose liquidity fees or redemption gates, and the Fund does not currently intend to impose such fees and/or gates."
Also, several firms have recently converted Institutional shares to Retail shares (or changed the name of share classes from "Institutional," including Vanguard and Deutsche. The prospectus supplement filing for Vanguard's $30 billion share class says, "The board of trustees of Vanguard Money Market Reserves has approved the conversion of Vanguard Prime Money Market Fund's Institutional Shares into Admiral Shares. This conversion is expected to occur in late 2015. The minimum investment amount and expense ratio are not expected to change from those listed in the current prospectus." (Note: This conversion occurred last week and caused a big shift from Inst to Retail in ICI's weekly numbers.)
Also, on Dec, 1, Deutsche converted the Institutional shares of its $3.4 billion Daily Assets Fund to Capital shares. (See our June 17, News, "Vanguard Sticks with Prime, Goes Pure Retail, Reopens Federal MMF," and our Oct. 13 News, "Schwab Going All Retail, Converting Inst Shares; MMP Switches to Govt.")
In fund merger news, Federated completed a set of mergers earlier this month. It explains in an earlier SEC filing, "Special Meetings of the shareholders of Federated Liberty U. S. Government Money Market Trust and Federated Automated Government Cash Reserves are proposed to be held on or about December 1, 2015 to approve or disapprove proposed Agreements and Plans of Reorganization pursuant to which: (a) Federated Government Reserves Fund would acquire all or substantially all of the assets of Federated Liberty U.S. Government Money Market Trust in complete liquidation and termination of Federated Liberty U.S. Government Money Market Trust; and (b) Federated Government Obligations Tax-Managed Fund would acquire all or substantially all of the assets of Federated Automated Government Cash Reserves in complete liquidation and termination of Federated Automated Government Cash Reserves." (See our June 25 News, "Federated Announces Retail Money Fund Plan, Streamlines MF Lineup.")
It continues, "Shareholders of the following Funds will receive information statements regarding proposed Agreements and Plans of Reorganization, proposed to close on or about December 4, 2015, pursuant to which: (a) Federated Trust for U.S. Treasury Obligations would acquire all or substantially all of the assets of Federated Treasury Cash Series in complete liquidation and termination of Federated Treasury Cash Series; (b) Federated Government Obligations Fund would acquire all or substantially all of the assets of Federated Government Cash Series in complete liquidation and termination of Federated Government Cash Series; (c) Federated Prime Cash Obligations Fund would acquire all or substantially all of the assets of Federated Automated Cash Management Trust and Federated Prime Cash Series in complete liquidation and termination of Federated Automated Cash Management Trust and Federated Prime Cash Series; and (d) Federated Municipal Obligations Fund would acquire all or substantially all of the assets of Federated Municipal Cash Series in complete liquidation and termination of Federated Municipal Cash Series."
Finally, BlackRock completed the liquidation of 3 Muni funds -- BlackRock New Jersey Muni MMF, BlackRock North Carolina MMF, and BlackRock Virginia Muni MMF. The filing says, "On or about December 15, 2015, all of the assets of the Funds will be liquidated completely." We originally wrote about this in our July 31 News, "BlackRock to Liquidate 3 Muni MMFs, Convert Old Merrill Primes to Govt."
