On July 22, we ran a story entitled, "Managers Rolling with Reform Changes; Recap of Announcements So Far," which summarized all of the money market fund reform related changes that had taken place in the first half of 2015. Since then, we have seen many more announcements and shifts, so we've hit the reset button to update all of the fund lineup changes that occurred in 2015, starting with the largest MMF managers and working our way down. Note: Readers may also review www.cranedata.com's "News Archives" (we recommend choosing "List Archives by Title Only" if you're browsing the history and selecting month by month to browse), "Link of the Day Archives" and "Money Fund Intelligence Archives" for more details.
On Feb. 2, 2015, we reported on Fidelity's announcement that it was shifting about $143.7 billion from Prime Retail to Government, including the world's largest money market, Fidelity Cash Reserves (now Fidelity Govt Cash Reserves. An Operational Update issued April 14 revealed additional details, including some new share classes for some existing funds. The main Prime to Govt conversions were completed on December 1. On Oct. 15, Fidelity announced plans for its Prime Institutional money market fund lineup. The changes include converting the $65.5 billion Fidelity Institutional Money Market Portfolio, the 4th largest money fund portfolio overall, to Prime Retail. Fidelity will retain one Prime Institutional fund, the $47.8 billion FIMM Prime Money Market Portfolio, the 7th largest. Fidelity will also convert its $2.2 billion FIMM Tax Exempt Portfolio to Retail, so it will have no T-E Inst funds.
Also in February, JP Morgan informed us that JP Morgan Prime, the largest Institutional Prime fund, will remain as such and will be subject to Floating NAV, while JP Morgan Liquid Assets will shift to Retail. JPM's also detailed which funds will be retail and which will be institutional among its lineup. (See the press release here.)
BlackRock has also been extremely busy. In April, BlackRock said its largest money market fund, TempFund, will remain a Prime Institutional fund, subject to floating NAV. The Prime Institutional $2.4B TempCash will remain Prime Institutional, but it will be converted to a 7-day maximum maturity fund, while some Muni funds will also be converted to 7-day funds. In July, we reported on further changes -- specifically, that BlackRock would liquidate 3 Muni funds and Convert 3 Prime Inst and 3 Prime Retail funds into Govt Funds. Those 6 Prime to Govie conversions, totaling $18.1 billion, occurred on Jan. 4, 2016. The big news, however, occurred in November, when BlackRock said it was buying BofA's $87B ($43B in MMFs) liquidity business. When this biggest-ever cash deal goes through in April 2016, BlackRock will become the second largest MMF firm. Then, on Nov. 30, we reported on a note BlackRock sent to clients that outlined which money funds will be categorized as Retail and Institutional.
Federated said in February that it will convert some of its Prime Institutional Funds to 60-day maximum maturity funds. (See our Feb. 20, 2015, News.) In June, Federated issued a second update, announcing it will have 6 Prime Retail and Muni funds, and will merge away 7 funds, including 3 Retail and 4 Government funds. In September, we reported on Federated's acquisition of Huntington Advisors' MMF assets. This was the third money market fund acquisition that Federated made in 2015, following the purchase of Reich & Tang's MMF business back in April, and the acquisition of Touchstone's Ohio Tax Free MMF in March. In November, Federated named which funds will be institutional -- Federated Money Market Management, Federated Prime Obligations Fund, Federated Prime Value Obligations Fund, and Federated Tax-Free Trust. The company also plans to launch a stable value private fund for in the first quarter of 2016.
Vanguard announced that it won't offer any Prime Institutional or Municipal floating NAV funds, but it didn't "go government" like many. Vanguard Prime MMF was designated a Prime Retail fund, and its Institutional Shares were renamed as Admiral (retail) Shares. Also, it reopened its Federal MMF, designated 6 muni funds as retail, and renamed the Vanguard Admiral Treasury Fund the Vanguard Treasury MMF. In March, Dreyfus said it was considering offering 60-day maximum maturity Prime Institutional funds. Dreyfus will offer all types of money funds and same-day settlement on floating NAV MMFs. Also in March we learned that Dreyfus acquired the bulk of Touchstone's money market fund business. In November, we reported on which funds Dreyfus will categorize as Retail, Institutional, and Govt. It also converted two Prime funds to Government funds.
In May, Charles Schwab said it will not implement fees and gates on its Government funds. In October, we got more details on Schwab's plans. They will rename all of its existing "Institutional" share classes to retail share classes. Schwab also said its $111 million Schwab Money Market Portfolio intends to convert to a "government money market fund" as of April 14, 2016. In November, we learned that Schwab will launch a new floating NAV money market fund, the Schwab Variable Share Price Money Fund, which should go live in January 2016.
Goldman Sachs was the first company to make a reform-related announcement; it said in January that it will start complying with the new definition of Government MMFs, converting 4 Government MMFs to the 99.5% requirement and stating that these won't have fees and gates. (See our Jan. 22, 2015, News.) In a follow up statement in July, Goldman said it was going to launch a new Prime Retail fund, convert a Prime fund to a Government fund, reposition a Government fund as a Treasury fund, and launch a new Government fund. (See our July 30 News.) On Dec. 21, Goldman detailed more changes in a press release, announcing their full lineup of money funds. (See our Dec. 21 News.) Specifically, they are keeping two Prime Institutional funds, expanding one Prime fund to include foreign securities, converting a Tax Free fund to Retail, launching a Tax Exempt Inst fund, and liquidating two other muni funds.
Morgan Stanley won't impose fees and gates on government funds, and anticipates adapting its current funds to the new rules (see News here). However, MSIM is planning on developing new products that meet the needs of investors in this space. Stay tuned for more from MSIM. Wells Fargo designated which funds will be Institutional, Retail, and Government (see Wells update here). It is also working on new products and won't impose fees and gates on Government Funds. In September, Wells said it will rebrand by taking out the "Advantage" name from its funds (see this News here). This went into effect in December. The 11th largest MMF manager, Northern Trust, has also been fairly quiet. In September, they filed with the SEC to make 3 of its Government funds to comply with the new regulations.
SSgA won't impose fees and gates on government funds, and the flagship State Street Institutional Liquid Reserves, a Prime Institutional fund, will adapt to reforms and offer the floating NAV, the firm said in June. Since then, State Street filed to launch 3 new money market funds, including a 60-day maximum maturity fund, and 3 new ultra short bond funds, including one that looks like a money fund in disguise. In October, we reported on SSgA's press release and white paper detailing the changes.
Early on, Invesco said it won't impose fees and gates on its Government funds. In November, we reported on more money fund changes at Invesco. The firm announced which funds will be Govt, Inst, and Retail. Also, the company said Invesco VI Money Market Fund will be converted from Prime to Govt on April 29, 2016. In our last update we said BofA hadn't made any announcements -- and now we know why. As referenced earlier in this piece, BlackRock will acquire BofA's money market fund business. Western Asset Management will also adapt funds to new requirements, but won't have fees and gates on Government funds. It will also launch two Short-Term Bond Funds. Also, in October, Western filed with the SEC to launch a new Prime Retail fund, the Western Prime Obligations MMF.
First American won't impose fees and gates on Government funds and is also considering developing 60 day funds and Private funds. UBS also won't impose fees and gates on its Government funds. It will have full roster of funds, including FNAV funds, and is looking to develop Private Funds, SMAs, and Ultra-short Bond funds, they said in June. In November, we learned that UBS filed with the SEC to launch 3 Prime Retail money market funds, each of which will invest through the same underlying master fund. They are the UBS Prime Investor, UBS Prime Preferred, and UBS Prime Reserves funds (with minimum investments of $10,000, $50,000,000, and $1,000,000, respectively). They will go live on Oct. 14, 2016.
Deutsche Wealth and Asset Management announced in July that it will convert 5 Prime Institutional portfolios into Government funds and will keep just one Prime Institutional Fund, the $113 million Deutsche Variable NAV Money Market Fund. It will also offer Retail funds, SMAs, and is considering new products as well. In November, Deutsche said it will introduce 2 Ultra-Short bond funds, Deutsche Limited Maturity Quality Income Fund and Deutsche Ultra-Short Investment Grade Fund. Also, we reported in December that Deutsche converted the Inst shares of its Daily Assets fund to Capital shares.
In September, we wrote that Franklin filed to convert all of its Prime portfolios into Government money funds, including Franklin Money Fund, Franklin Templeton Money Fund, and Franklin Institutional Fiduciary Trust (IFT) Money Market Portfolio. Overall, these 3 portfolios have about $24.5 billion in assets. The conversions were completed in November 2015. The 20th largest MMF manager, American Funds also will convert the $12 billion American Funds Money Market Fund to a Government fund, American Funds US Government MMF. The change will go into effect on April 1, 2016.
Rounding out the top 25, RBC Global Asset Management said in December it will close its $8 billion RBC Prime Money Market Portfolio on Sept. 30, 2016. Shareholders invested in the fund will be notified of their options, including eligibility to exchange shares into shares of RBC U.S. Government Money Market Fund. (Also, in November, RBC acquired City National Bank, which runs the CNR funds.)
T. Rowe Price will convert its largest Prime fund, Prime Reserve, to Government and will launch a new Prime Institutional fund. SEI liquidated share classes of several money funds -- Prime Obligations, Money Market Fund, Government, Government II, Treasury, and Treasury II. The B, C, and H shares were converted into the A shares. HSBC added a new "portal" share class for 3 of its MMFs. Also, Oppenheimer announced will convert all $10.1B of its Prime funds to Government funds, on Sept. 28, 2016, including Oppenheimer MMF, Oppenheimer Cash Reserves, and Oppenheimer Inst MMF. Also, Oppenheimer Money Fund/VA will become Oppenheimer Govt Money Fund/VA on April 29. 2016.
A number of other money fund managers have also made or announced changes. American Century converted its $1.4 billion American Century Premium MMF to a Government fund on December 1; Pioneer converted its $260 million Pioneer Cash Reserves to a Government fund in November; and Nationwide will convert the Nationwide MMF and the Nationwide VIT MMF to Government funds on October 14, 2016. In a December News story, we reported on 6 small managers that converted Prime funds to Government funds. The conversions include: John Hancock Money Market Fund into John Hancock Government Money Market Fund; Prudential Money Mart Assets into Prudential Govt MMF; SunAmerica MMF into SunAmerica Government MMF, Thrivent Money Market Fund into a Government fund; TIAA-CREF MMF into a Govt fund; and Cavanal Hill Cash Management Fund into Cavanal Hill Government Securities Money Market Fund. Also, we wrote in December about Voya converting 3 Prime funds -- Liquid Assets Portfolio; Money Market Portfolio; and Money Market Fund -- to Government funds.
Finally, the SEC's pending reforms (and presumably ultra-low yields) have prompted several managers to get out of the money fund business, including the aforementioned Reich & Tang, Touchstone, Huntington, and BofA. Others that have exited the business via liquidations or other means include Alpine, William Blair, Delaware (which converted its only MMF to an Ultra-Short BF), Forwards Funds, and Eaton Vance. We'll no doubt see more changes in 2016, and Crane Data will be sure to keep you updated. Thanks for your support in 2015, and Happy New Year!
