The money market fund changes and the hits to Prime Retail and Tax-Exempt MMFs just keep on coming. Today we report on filings from Putnam, UBS, RBC, and Deutsche on fund liquidations, Prime to Govie conversions, and Tax-Exempt Inst to Retail changes. The big news: UBS is converting its Liquid Assets "sweep" fund to Government, and also making several changes related to funds in sweep accounts. It's also converting some Tax-Exempt Inst funds to Retail. Putnam too filed to convert its Putnam VI Money Market Fund from Prime to Govie and it decided to liquidate Putnam Tax-Exempt fund. We also mention some new RBC and Deutsche filings, which provide details on changes that have already been announced.
UBS has made several SEC filings in recent weeks (watch for our "Profile" of them in the March Money Fund Intelligence too), including one to convert the $824 million UBS Liquid Assets Fund from Prime to Government. The Liquid Assets filing states, "The purpose of this supplement is to update the Prospectus and SAI in response to amendments to Rule 2a-7 under the Investment Company Act of 1940, as amended, the primary rule governing money market funds, including UBS Liquid Assets Fund. The changes are expected to become effective on or about April 15, 2016. As discussed in more detail below, the Prospectus and SAI are being updated to: (1) reflect that the Fund intends to qualify and operate as a "government money market fund," as defined in the Amendments, and (2) change the Fund's name to "UBS Liquid Assets Government Fund."
It adds, "The Board also approved changing the Fund's name to UBS Liquid Assets Government Fund in an effort to ensure that the Fund is understood to be a government money market fund.... In addition, effective October 30, 2015, the Fund's investment advisor and distributor were renamed UBS Asset Management (Americas) Inc. and UBS Asset Management (US) Inc., respectively. All references to "UBS Global Asset Management (Americas) Inc." in the Fund's Prospectus and SAI are hereby replaced with "UBS Asset Management (Americas) Inc."
Several of the new UBS filings relate to funds no longer being offered in sweep accounts. The filing for UBS Retirement Money Fund states, "The purpose of this supplement is to update the Prospectus and SAI in response to amendments to Rule 2a-7 under the Investment Company Act of 1940, as amended, the primary rule governing money market funds, including UBS Retirement Money Fund. These regulatory changes, which have a tiered compliance period that extends until October 2016, impact key aspects of how money market funds are structured and operate. Later this year, but before the October 2016 compliance deadline, the Fund may no longer be offered as a sweep fund as part of certain distributor platforms. As a result, the Fund's shareholders would be transitioned to an alternative money market sweep fund. Shareholders will receive additional information at a future time in advance of these changes."
A filing for the UBS RMA Money Market Portfolio, RMA US Govt Portfolio, RMA Tax-Free Fund, RMA California Muni Fund, and RMA New York Muni Fund includes similar language. Additionally, another filing for the UBS Select Prime Capital and UBS Select Tax-Free Capital says the same thing.
There are also 3 filings related to converting Muni Inst funds to Retail. The first filing is for the UBS Select Prime Inst and UBS Select Tax-Free Inst funds. It says, "The purpose of this supplement is to update the Prospectus and SAI in response to amendments to Rule 2a-7 under the Investment Company Act of 1940, as amended, the primary rule governing money market funds, including UBS Select Prime Institutional Fund and UBS Select Tax-Free Institutional Fund. These regulatory changes, which have a tiered compliance period that extends until October 2016, impact key aspects of how money market funds are structured and operate. Later this year, on or before the October 2016 compliance deadline, UBS Select Prime Institutional Fund will no longer be able to use the amortized cost method of valuation to seek to maintain a stable $1.00 net asset value per share as a result of the Amendments and will have a floating NAV."
It continues, "UBS Select Tax-Free Institutional Fund intends to qualify and operate as a "retail money market fund," as defined in the Amendments, and will continue to seek to maintain a stable $1.00 NAV per share. In order to qualify as a "retail money market fund," later this year this Fund will adopt policies and procedures reasonably designed to limit all beneficial owners to "natural persons."
UBS adds, "Shareholders who do not so qualify will no longer be permitted to own Fund shares and are expected to receive information at a future time regarding alternative money market funds. Each of UBS Select Prime Institutional Fund and UBS Select Tax-Free Institutional Fund may be subject to the imposition of liquidity fees and/or the temporary suspension of redemption privileges if the Fund's portfolio liquidity falls below certain required minimum levels because of market conditions or other factors once transitioned later this year in compliance with the Amendments. Effective on or about August 31, 2016, the name of UBS Select Tax-Free Institutional Fund will be changed to "UBS Tax-Free Reserves Fund."
A filing for the UBS Select Prime Preferred and UBS Select Tax-Free Preferred funds, as well as a filing for the UBS Select Prime Investor Fund, UBS Select Treasury Investor Fund, and UBS Select Tax-Free Investor Fund, includes similar language. In other words, UBS Select Tax-Free Preferred and UBS Select Tax-Free Investor will be designated as Retail funds and both change their names to UBS Tax-Free Preferred and UBS Tax-Free Investor, respectively, on August 31, 2016. Select Prime Investor and Select Prime Preferred will adopt the floating NAV on or before October 2016.
Putnam filed to liquidate its $39 million Putnam Tax-Exempt Money Market Fund. The Prospectus Supplement says, "At a meeting held on January 29, 2016, the Board of Trustees of Putnam Tax Exempt Money Market Fund approved a plan to liquidate the Fund upon recommendation by Putnam Investment Management, LLC, the Fund's investment adviser. The liquidation of the Fund is expected to occur on or about March 23, 2016. Effective as of February 12, 2016, the Fund will be closed to new purchases, other than the reinvestment of dividends, in anticipation of the liquidation. Shareholders can redeem their shares from the Fund at any time on or before the close of business on March 23, 2016 at the then-current net asset value." (See our Feb. 24 News, "Clean Sweep: Tax Free MMFs Liquidating En Masse; BofA, RBC, Deutsche," where we recap recent Muni fund liquidations.)
Also, the $129 million Putnam Variable Trust Money Market Fund will be converted to a Government fund, according to the SEC filing. The filing states, “In connection with the Securities and Exchange Commission’s amendments to Rule 2a-7 under the Investment Company Act of 1940, as amended, which governs money market funds, Board of Trustees of Putnam VT Money Market Fund has approved the conversion of the fund to a “government money market fund,” as defined by Rule 2a-7. This conversion will result in changes to the fund’s investment strategies and the fund’s name. Effective April 30, 2016, the fund will be called Putnam VT Government Money Market Fund and the following disclosure will be included in the fund's prospectus, as indicated below."
The RBC filing is for the RBC Prime Money Market Fund, which says the "RBC Institutional Class 1 shares of the Prime Money Market Fund will no longer be available for new investment effective March 22, 2016." (See yesterday's News about them liquidating their Tax Free MMF and our `Dec. 1 News, "RBC Latest to Abandon Prime MMFs; BlackRock Designates Retail, Inst.") RBC is liquidating the rest of the $8 billion Prime portfolio in September 2016.
Finally, Deutsche filed with the SEC to convert a series of Prime funds to Govt funds, as they first announced last summer. (See our July 21, 2015 News, "Deutsche Announces Reform Plans, Will Convert Most Prime MFs to Govt.") The funds are: Cash Reserve, Cash Preserve Prime, Cash Reserves Prime Inst, Cash Management, Cash Reserves Inst, and Money Market Series. They will all convert to Govt on May 2, 2016.
