Below, we review yet another batch of money fund changes, including a number of liquidations, closings, conversions and declarations. BlackRock is liquidating its BIF National and State-Specific Municipal funds, Nicholas Money Market Fund is closing to new investors, a likely precursor to liquidation, and MainStay Money Market Fund designated itself as Retail. We also review filings from Morgan Stanley Investment Management, which involve its Retail fund lineup and strike times for its Institutional funds. Finally, the $4.8 billion PFM Prime Series Fund is converting to Government, according to a recent SEC filing. That brings the total of Prime funds either liquidating or converting to Government to $314.1 billion (it moves to over $350 billion when the conversion of the $40+ billion Prudential Core to an ultra-short bond fund is included).
The carnage in the Tax Exempt Money Fund sector continued as the former Merrill Lynch CMA Muni funds liquidated BlackRock's BIF filing explains, "On May 19, 2016, the Board of Trustees of BIF Tax-Exempt Fund approved a proposal to close the Trust to share purchases. Accordingly, effective at the close of business on July 11, 2016, the Trust will no longer accept purchase orders. Also on May 19, 2016, the Board of Trustees of BIF Multi-State Municipal Series Trust, on behalf of BIF California Municipal Money Fund, BIF Connecticut Municipal Money Fund, BIF Massachusetts Municipal Money Fund, BIF New Jersey Municipal Money Fund, BIF New York Municipal Money Fund and BIF Ohio Municipal Money Fund, approved a proposal to close each Fund to share purchases. Accordingly, effective at the close of business on July 11, 2016, each Fund will no longer accept purchase orders." A note from BlackRock confirmed that each of these funds are indeed liquidating.
Another tiny money fund manager is falling by the wayside too. Nicholas Money Market Fund, an $89 million Prime fund, is liquidating. Its Prospectus Supplement says, "Effective June 30, 2016, the Fund will be closed to new investors and to additional purchases by existing shareholders. Effective June 30, 2016, the following language has been added to or replaces similar language on the front cover page and inside cover page of the Fund's Prospectus, dated April 30, 2016: Nicholas Money Market Fund, Inc. – Closed to Investors." Nicholas is the smallest of the 64 money fund managers Crane Data tracks.
Also, the $400 million MainStay Money Market Fund was designated as Retail, according to a new filing. It says, "At a meeting held on June 21-22, 2016, the Board of Trustees of The MainStay Funds approved the designation and operation of the MainStay Money Market Fund as a "retail money market fund," as such term is defined or interpreted under Rule 2a-7 under the Investment Company Act of 1940, as amended. As a "retail money market fund," effective on or before October 14, 2016, the Fund will adopt, and will work with financial intermediaries to implement, policies and procedures reasonably designed to limit all beneficial owners of the Fund to natural persons."
MainStay continues, "Effective August 1, 2016, the Fund will be closed to purchases by any new accounts that are not beneficially owned by natural persons. Current accounts that are not beneficially owned by natural persons may continue to purchase shares of the Fund until September 1, 2016. On or about October 1, 2016, the Fund will begin to redeem any Fund shares held in accounts that are not beneficially owned by natural persons."
A new Morgan Stanley filing, under "Summary of Money Market Fund Changes -- Overview of Government and Retail Money Market Funds," says, "The Board has approved, upon the recommendation of Morgan Stanley Investment Management Inc., the designation of each of the Active Assets Government Securities Trust, Active Assets Government Trust and Morgan Stanley U.S. Government Money Market Fund as a "government money market fund" as defined in Rule 2a-7 under the Investment Company Act of 1940, as amended."
Under "Retail Money Market Funds," it states, "The Board has approved, upon the recommendation of MSIM, the designation of each of the Active Assets California Tax-Free Trust, Active Assets Money Trust, Active Assets Prime Trust, Active Assets Tax-Free Trust, Morgan Stanley California Tax-Free Daily Income Trust, Morgan Stanley Liquid Asset Fund Inc., Morgan Stanley New York Municipal Money Market Trust and Morgan Stanley Tax-Free Daily Income Trust as a "retail money market fund" as defined in Rule 2a-7 under the 1940 Act, effective on or about October 7, 2016."
It adds, "On or before the Effective Date, investments in Retail Funds will be limited to accounts beneficially owned by natural persons. Financial Intermediaries will be required to take steps to remove any shareholders on behalf of whom they hold shares in a Retail Fund that are not eligible to be invested in the Fund prior to such date and must notify the Fund of any ineligible shareholders that continue to own shares of the Fund on such date.... Effective July 18, 2016, the Retail Funds reserve the right to redeem shares in any account that they cannot confirm to their satisfaction are beneficially owned by natural persons, after providing advance notice."
A separate filing for Morgan Stanley Institutional Liquidity Funds says, "The Board of Trustees of Morgan Stanley Institutional Liquidity Funds (the "Fund") has approved a decrease in the minimum initial investment amount and minimum average balance policy with respect to each share Class of the Portfolio, effective October 1, 2016.... Each share Class of the Portfolio is available to investors who at the time of initial purchase make a minimum purchase of $10,000,000." (The change is for the previously ultra-high minimum Money Market Portfolio, which previously had a minimum of $150 million.)
It continues, "The Board has approved, upon the recommendation of Morgan Stanley Investment Management Inc., the investment adviser of the Fund, the designation of each of the Money Market Portfolio, Prime Portfolio and Tax-Exempt Portfolio as an "institutional money market fund" as defined in Rule 2a-7 under the Investment Company Act of 1940, as amended." Money Market Portfolio will have a single strike time of 3pm and Tax-Exempt a single strike of 1pm, while Prime Portfolio will have multiple strike times of 8am, noon and 3pm <b:>`_. (For more, see our March 17 News, "Morgan Stanley Declares Inst Funds in Filing; BlackRock Fed RRP Fund.")
Finally, PFM's fund filing says, "The following supplements information contained in the Prospectus and Statement of Additional Information of Prime Series and Government Series, each an investment portfolio of PFM Funds. Effective October 3, 2016, Prime Series will operate as a government money market fund and will have a policy of investing at least 99.5% of its assets in cash, U.S. government securities (including securities issued or guaranteed by the U.S. government or its agencies or instrumentalities) and/or repurchase agreements that are collateralized fully. This change in the investment program of Prime Series will allow Prime Series to continue to seek to maintain a stable net asset value of $1.00 per share after certain new requirements applicable to money market funds and adopted by the Securities and Exchange Commission become effective. In view of this new investment policy, the name of Prime Series will be changed to "Government Select Series" effective October 3, 2016."
It continues, "Prior to October 3, 2016, Prime Series may continue to invest in money market instruments issued by U.S. companies, financial institutions and U.S. municipalities and shares of other money market mutual funds that invest exclusively in the types of obligations in which Prime Series is permitted to invest (as described in the Prospectus). However, all such investments must have maturity dates that are not later than September 30, 2016, so that Prime Series will be in compliance with its new investment policy when it becomes effective. Effective October 3, 2016, Government Series will have a policy of investing at least 99.5% of its assets in cash, U.S. government securities (including securities issued or guaranteed by the U.S. government or its agencies or instrumentalities) and/or repurchase agreements that are collateralized fully." (See too a separate filing for the PFM SNAP share class.)
