Allspring, formerly the Wells Fargo Funds, is the latest money market mutual fund family to announce an exit from the Prime Institutional space ahead of the SEC's pending emergency mandatory liquidity fee rules (which go into effect in early October). A Product Alert titled, "Allspring to Merge Two Money Market Funds," tells us, "The Allspring Funds Board of Trustees has approved the merger of the [$3.1 billion] Allspring Heritage Money Market Fund into the Allspring Government Money Market Fund. The merger is expected to take place at the close of business on or around August 16, 2024. Note that the Service Class of the Heritage Money Market Fund will merge into the Administrator Class of the Government Money Market Fund, and the Administrator Class of the Heritage Money Market Fund will merge into the Institutional Class of the Government Money Market Fund." (Note: We're still taking registrations for Money Fund Symposium in Pittsburgh June 12-14. We hope to see you there!)
In a Q&A, it asks, "What are some key benefits of the proposed fund merger?" They write, "Heritage Money Market Fund shareholders will benefit from a significant increase in fund scale." They also write, "What are some key similarities and differences between the merging fund and the acquiring fund? Both funds are managed by the Global Liquidity Solutions investment team, led by Jeffrey Weaver. The funds are managed to meet the requirements of Rule 2a-7 under the Investment Company Act of 1940."
The piece explains, "The funds employ different investment strategies. As an institutional prime money market fund, the Heritage Money Market Fund invests primarily in a wide range of high-quality, short-term U.S. dollar-denominated money market securities -- including, but not limited to, bank obligations such as time deposits and certificates of deposit, government securities, asset-backed securities, commercial paper, corporate bonds, municipal securities, and repurchase agreements. The Government Money Market Fund invests exclusively in U.S. government obligations and repurchase agreements collateralized by U.S. government obligations."
Finally, it asks, "Will the merger be a taxable event for shareholders?" Allspring replies "No. All of the mergers are expected to be tax-free exchanges for U.S. federal income tax purposes. However, to prevent adverse tax consequences for shareholders, the merging fund may make a distribution of income and/or capital gains in advance of the merger. Clients are encouraged to consult their tax advisors about how this may affect them. Can investors still transact in the merging and acquiring funds prior to the merger? Yes."
A "Prospectus Supplement filing for the Allspring Institutional Money Market Funds" states, "At a meeting held on May 28-30, 2024, the Board of Trustees of Allspring Funds Trust unanimously approved the merger of the Fund listed in the table below (the 'Target Fund') into another Fund of the Trust (the 'Acquiring Fund'), which is also listed below (the 'Merger'). The Merger was proposed by Allspring Funds Management, LLC, investment manager to the Funds." A table shows Allspring Heritage Money Market Fund as the Target Fund and Allspring Government Money Market Fund” as the Acquiring Fund.
The filing continues, "The Merger is intended to be a tax-free reorganization, and it is anticipated that Target Fund shareholders will not recognize any gain or loss for U.S. federal income tax purposes as a result of the Merger. Additionally, Target Fund shareholders will not incur any sales loads or similar transaction charges as a result of the Merger. The Merger is expected to occur on or about August 16, 2024. Prior to the Merger, shareholders of the Target Fund may continue to purchase and redeem shares subject to the limitations described in the Target Fund’s prospectuses."
It adds, "The Target Fund will be closed to new investors as of the close of business on June 14, 2024. No shareholder action is necessary. Additional information, including a description of the Merger and information about fees, expenses and risk factors, will be provided to Target Fund shareholders in a prospectus/information statement that is expected to be mailed to shareholders in July 2024. Following the Merger on August 16, 2024, all references to Allspring Heritage Money Market Fund are hereby removed."
Allspring also released a second Product Alert, "Portfolio Manager Changes to Five Allspring Money Market Funds," which states, "Allspring Global Investments announced today that Laurie White, senior portfolio manager on the Global Liquidity Solutions team, has made a personal decision to retire from the firm. We thank Laurie for the significant contributions she has made over the years, and we wish her all the best in retirement. The Global Liquidity Solutions team and the Allspring money market funds continue to benefit from a tremendous depth and experience in portfolio management, risk management, and credit research."
It comments, "Effective September 1, 2024, Laurie will be removed from the Allspring Funds listed in the table below. Effective today, Vladislav (Vlad) Stavitskiy, senior portfolio manager on the Global Liquidity Solutions team, will be added to the same Allspring Funds." He joins Jeffrey Weaver and Michael Bird.
Allspring adds, "Vladislav (Vlad) Stavitskiy is a senior portfolio manager for the Global Liquidity Solutions team at Allspring Global Investments. He specializes in managing taxable money market funds and enhanced cash separate account mandates. Vlad is instrumental in the development of the team's proprietary application for portfolio and risk management. He joined Allspring from its predecessor firm, Wells Fargo Asset Management (WFAM)."
In related news, a "Form N-1A filing for the UBS Series Funds," states, "UBS Series Funds has filed this Amendment No. 93 to the Registration Statement of the Trust on Form N-1A (File No. 811-08767) pursuant to Section 8(b) of the Investment Company Act of 1940, as amended. Shares of beneficial interest in Limited Purpose Cash Investment Fund, a series of the Trust, are not being registered under the Securities Act of 1933, as amended, since such shares will be issued solely in private placement transactions that do not involve any 'public offering' within the meaning of Section 4(a)(2) of the 1933 Act."
It continues, "Only investment companies, insurance company separate accounts, common or commingled trust funds or other organizations, entities or investors that are 'accredited investors' within the meaning of Regulation D under the 1933 Act may make investments in the shares of the fund. Such investors are referred to herein as 'shareholders.' This Registration Statement is not an offer to sell, or the solicitation of an offer to buy, any shares in the fund."
Discussing the $5.6 billion "Limited Purpose Cash Investment Fund," UBS says, "The purpose of this amendment is to update certain information contained in Parts A and B for Limited Purpose Cash Investment Fund, a series of UBS Series Funds. At the recommendation of UBS Asset Management (Americas) LLC, the fund's investment adviser, the Board of Trustees of the Trust approved the conversion of the fund to operate as a 'government money market fund' as defined in Rule 2a-7 under the Investment Company Act of 1940, as amended."
Finally, they add, "As a result, the fund will adopt a new investment policy to invest at least 99.5% of its total assets in cash, government securities and/or repurchase agreements that are 'collateralized fully' by cash or government securities. The Conversion will become effective on or about August 27, 2024. After the Conversion, the fund will continue to calculate its net asset value to four decimals (e.g., $1.0000) using market-based pricing, and its share price will fluctuate."
For more on recent Prime Institutional MMF liquidations and conversions, see these Crane Data News stories: "DWS Liquidating ESG Liquidity Fund, 7th Prime Inst to Exit" (5/22/24), "Dreyfus Files to Liquidate Cash Management Prime Inst MMF, Tax Exempt" (5/13/24), "Goldman Files to Liquidate Prime Inst MMFs; Barron's: MMFs Tempting" (4/22/24), "Federated Liquidating Money Mkt Trust" (4/1/24), "Vanguard Market Liquidity Fund Files to Go Government, Joins American" (3/20/24) and "American Funds Central Cash to Convert to Govt to Avoid Liquidity Fees" (2/6/24).) For more on liquidations in the ESG MMF space, see these stories, "UBS Latest to Abandon ESG Money Funds; JNL Liquidates Money Fund" (10/13/23) and "Morgan Stanley Latest to Abandon ESG MMFs; Weekly, ICI Portfolio Holds" (8/16/23).
