The latest comment letter posted on the SEC's website for the President's Working Group Report on Money Market Fund Reform (Request for Comment) is from Thomas Horgan, President and CEO of the New Hampshire College & University Council. His letter says, "I write to offer comments on behalf of the board of the New Hampshire College & University Council (NHCUC) and our eighteen member public and private higher education institutions regarding money market mutual funds and proposals to further amend Rule 2a-7. Specifically, the NHCUC has serious concerns relating to any proposal that would require a floating NAV for these funds rather than a stable $1.00 per share NAV. A floating NAV for money market mutual funds would require significant and expensive changes to operational and recordkeeping systems for our member institutions."
Horgan continues, "Many of our member colleges and universities regularly use money market mutual funds for their cash management needs. These funds have consistently proven to be a safe, efficient, and effective cash management tool. Requiring a floating NAV would have negative implications for the utilization of money market mutual funds, as investors would be forced to seek alternative products that are less regulated and provide less diversification. To that end, we are concerned a floating NAV would effectively eliminate money market mutual funds as a viable investment tool for public and private higher education institutions."
Finally, he adds, "While we are aware of the money market fund liquidity issues revealed during the 2008 economic crisis, it appears that recent reforms have already significantly addressed the need for increased fund liquidity and the capacity to satisfy large redemption requests in times of market stress. The proposal to create a floating NAV would do nothing to make money market funds more secure for investors should adverse liquidity conditions occur in the future. A floating NAV would make the management of money market mutual funds too onerous, expensive and complicated for most institutional investors, including those of us in higher education. We appreciate the opportunity to comment on this important topic and your careful consideration of our concerns."
In other news SunAmerica filed to liquidate its Municipal Money Market Fund. The filing says, "On January 17, 2012, the Board of Directors of the Company approved a Plan of Liquidation for the SunAmerica Municipal Money Market Fund, a series of the Company, pursuant to which the Fund will be liquidated on or about March 2, 2012, subject to shareholder approval. If shareholders approve the Plan, the distribution of Liquidation proceeds to shareholders of record as of the close of business on the day prior to the Liquidation Date will occur on the Liquidation Date."
It adds, "As previously announced in a supplement to the Fund's prospectus dated December 5, 2011, the Fund closed to new investments on January 13, 2012, and no longer accepts orders to buy Fund shares from new investors or existing shareholders (although reinvestments of any dividends and capital gain distributions from existing shareholders continue to be permitted). As anticipated, the closing of the Fund to new investments resulted in a significant redemption of Fund shares by shareholders who hold Fund shares through brokerage accounts that utilized the Fund as a cash 'sweep' vehicle. Due to the size of the remaining assets in the Fund, the Fund has had to depart from its stated investment strategies and techniques, although the Fund continues to seek to maintain a stable share price of $1.00 and to follow the rules of the Securities and Exchange Commission applicable to money market funds relating to the credit quality, liquidity, diversification and maturity of investments. If the Liquidation is approved by shareholders, the Fund will cease to engage in any investment activities, except for the purpose of winding up its business and affairs, preserving the value of its assets, discharging or making reasonable provision for the payment of all of its liabilities and distributing its remaining assets to shareholders in accordance with the Plan."
The filing adds, "The closing of the Fund to new investments (and Liquidation, if approved by shareholders) does not restrict shareholders from selling shares of the Fund and shareholders may redeem their shares at any time (up until the Liquidation Date, if the Liquidation is approved by shareholders), in accordance with the terms set forth in the Fund's prospectus. On or about February 23, 2012, the Fund expects to convene a special meeting of shareholders to vote on the Plan. Shareholders of record of the Fund as of the close of business on January 19, 2012 are entitled to notice of and to vote at the special meeting, and will receive proxy materials describing the Liquidation and Plan in greater detail."
