Minority-and-woman-owned fixed-income asset manager Utendahl Capital Management has just filed with the SEC to launch Utendahl Floating NAV Fund, a quasi-money market offering that will invest in two underlying portfolios, Utendahl Credit Floating NAV Fund, run by PIMCO, and Utendahl Government Floating NAV, run by Utendahl. The hybrid, though it doesn't use the term "money market" in its name, certainly sounds like it will operate like one, but without the $1.00 NAV. It appears to follow in the footsteps of Deutsche's DWS Variable NAV Money Fund. (See Crane Data's Sept. 3 News "Deutsche Proposes Floating NAV MMFs to Join Stable in SEC Comment".)
The Utendahl Floating NAV Fund's filing says, "The Fund seeks to provide high levels of current income while providing daily liquidity and principal preservation. The Fund is a 'fund of funds' that seeks to achieve its investment objective by investing in a combination of underlying funds managed by the Adviser. The Fund's assets are allocated among the Underlying Funds. The allocation between the Credit Fund and the Government Fund will remain in a range of at least 20% and no more than 80% allocated to each of the Underlying Funds."
It says, "The Underlying Funds maintain an average portfolio maturity of 90 days or less (weighted by the relative values of its holdings), and generally do not invest in any securities with a remaining maturity of more than 465 days (approximately 15 months). In general, the majority of securities will have a remaining maturity of 397 days or less. Each of the Fund and Underlying Funds is a floating NAV fund and seeks to maintain a net asset value close to $10.00 per share. Unlike money market funds, the Underlying Funds do not seek to maintain a stable share price of $1.00 and will not use the amortized cost method of valuation."
The filing continues, "Instead, the Underlying Funds generally value their portfolio securities using current market prices furnished by an independent pricing service. As a result, each Underlying Fund's share price, which is its net asset value per share (or NAV), will vary and reflect the effects of unrealized appreciation and depreciation and realized losses and gains. This feature is designed to maintain liquidity and reduce the likelihood of shareholder redemptions prompted to avoid unrealized depreciation or realized losses."
The fund's expenses have been capped at 0.20% and its minimum is $5 million. It will be managed by Thomas Mandel of Utendahl Capital Management. The fund will be distributed by Foreside Distributors and administed by Atlantic Fund Administration, both located in Portland, Maine.
This mark's Utendahl's first return to the "cash" space since halting redemptions on its UCM Institutional Money Market Fund (UCMXX) the week of the money market meltdown in September 2008. UCMXX was liquidated in April 2009 with no losses to shareholders. Crane Data doubts that floating rate "money market funds" will be permitted by regulators, and thinks investor interest will be slim even if they're allowed. But we'll of course be watching developments with great interest.
P.S. Merry Christmas from Crane Data LLC! We wish all of you a safe and happy Holiday!
