Money fund managers continue to enhance their websites to meet the new disclosure requirements that went into effect on April 14. Goldman Sachs Asset Management posted an update on the changes they've made to comply with the SEC's reforms, and also announced strike times for their funds that will have floating NAVs in October. (For more, see our April 14 News, "Money Fund Disclosure Reforms Go Live; Websites Add MNAVs, DLA, WLA.") We also review recent earnings reports from investment managers, which so far show that fee waivers have declined sharply in the first quarter of 2016. BNY Mellon, T. Rowe Price and Northern Trust all show sharp increases in money fund revenues, following Schwab's earnings jump. (See our April 18 Link of the Day, "Schwab Earnings: MMF Revenues Jump, Shift to Bank Deposits Continues.") Federated also reports earnings this Friday.
Goldman's release, entitled, "Updated Product Line Up and Compliance of April 14, 2016 Regulatory Requirements," provides an overview of the changes to its money fund website, Liquidity Solutions. It reads, "As investors prepare for the upcoming compliance date for changes to the Securities and Exchange Commission (SEC) Rule 2a-7, we are pleased to announce two important milestones. These milestones include compliance with all of the April 14, 2016 regulatory requirements and the announcement of the NAV strike times for our Institutional Money Market Fund (MMF) product line up. We will also be updating the closing times for our tax-exempt funds."
The statement continues, "Building upon recently-launched risk management and analysis tools on the Liquidity Solutions Portal, we are pleased to announce the addition of daily and weekly liquidity percentages and net shareholder flows across the US domestic fund complexes available on the platform. Additional development is well underway to ensure the platform effectively supports Institutional Prime Money Market funds with a floating net asset value (FNAV)."
GSAM explains, "Website Reporting -- Daily reporting to the public website of: Daily and weekly liquid assets plus 6-month historical data; Daily net shareholder inflows/outflows plus 6-month historical data; Market-based NAV per share plus 6-month historical data. Stress Testing – Each MMF is required to test a fund's ability to minimize principal volatility, maintain a stable share price (in stable NAV funds), and maintain weekly liquid assets of at least 10% in response to specified hypothetical events."
They continue, "Diversification – New diversification limits for affiliates and guarantors: Aggregation of certain affiliated entities as single issues subject to the 5% diversification limit; Removal of exception that allows 25% of a fund's portfolio to be subject to guarantees or demand features from a single institution (except for tax-exempt and single state funds, for which the basket is reduced to 15%); Treatment of the sponsors of asset-backed securities as guarantors subject to the 10% diversification limits applicable to guarantees and demand features. Form N-MFP – Additional data fields are required to be reported on existing Form N-MFP which is filed monthly beginning on May 6, 2016. Form PF – Additional data fields are required to be reported on existing Form PF which is filed quarterly beginning on July 15, 2016."
Goldman also set the "strike times" for its FNAV funds. They write, "Over the past 18 months, GSAM has engaged with hundreds of clients regarding the impacts of the changes to Rule 2a-7 and the related operational considerations surrounding floating NAV to better understand what product features and services solutions are most important to our clients. We are pleased to announce following these conversations that we plan to offer Institutional FNAV funds with both single NAV strike times and multiple NAV strike times in order to meet the varied demands of our client base."
The statement adds, "We will offer Institutional NAV funds with the following NAV strike times: Financial Square Prime Obligations: 3 PM ET; Financial Square Money Market: 8AM, 12PM, 3PM ET; Financial Square Tax-Exempt: 2PM ET." We expect that all three portfolios will begin transacting at a FNAV on or around October 1, 2016. We will provide further clarity of the transition date as we get closer to October."
Finally, on their Liquidity Solutions Portal, Goldman writes, "We would also like to inform you that the Liquidity Solutions Portal has completed development of many aspects of the new regulations ahead of the October implementation date. Expanded data points are available along with "traditional" metrics across the 15 US domestic fund complexes on the platform, including daily and weekly liquid assets and the ability to establish customized monitoring thresholds. In addition, the portal is being enhanced to support single and multiple NAV FNAV funds with intra-day pricing and enhanced controls in the event of liquidity fees or redemption gates."
In other news, money fund managers continue to show lower fee waivers in their latest earnings reports. BNY Mellon issued its Q1 earnings release, saying half of its money market fund fee waivers were recovered by the December rate hike. It says, "Total fee revenues were up 1% on a linked-quarter and down 1% on a year-over-year basis. Linked-quarter results mainly reflect improvements in depositary receipts due to higher dividend fees and lower money market fee waivers in investment management, clearing services and corporate trust, offset somewhat by seasonally weaker performance fees and lower investment management fees. Year-over-year results were affected by weaker foreign exchange trading and lower asset management fees due to net outflows, offset somewhat by lease-related gains and lower money market waivers. Management indicated that roughly half of money market fee waivers have been recovered following the Fed's December rate increase."
T. Rowe Price also reported reduced fee waivers in its Q1 earnings, explaining, "Money market advisory fees and other fund expenses voluntarily waived by the firm to maintain positive yields for investors in the first quarter of 2016 were $4.0 million, compared with $13.7 million in the 2015 quarter. The firm expects that it will continue to waive such fees for the remainder of 2016."
Northern Trust too announced its Q1 earnings last week. The Northern release says, "Investment management fees increased $12.7 million, or 17%, primarily due to lower money market mutual fund fee waivers. Money market mutual fund fee waivers in C&IS totaled $1.7 million in the current quarter compared to $15.2 million in the prior-year quarter.... Trust, investment and other servicing fees totaled $748.2 million in the current quarter, up slightly from $747.1 million in the prior quarter, primarily attributable to lower money market mutual fund fee waivers, partially offset by unfavorable impact of equity markets and movements in foreign exchange rates."
Finally, Federated Investors will hold its Q1 2016 earnings call on Friday. Its press release says, "Federated Investors ... will report financial and operating results for the quarter ended March 31, 2016 after the market closes on Thursday, April 28, 2016. A conference call for investors and analysts will be held at 9 a.m. Eastern on Friday, April 29, 2016. President and Chief Executive Officer J. Christopher Donahue and Chief Financial Officer Thomas R. Donahue will host the call.... Investors interested in listening to the conference call should dial 877-407-0782 (domestic) or 201-689-8567 (international) or visit FederatedInvestors.com for real time Internet access. To listen via the Internet, go to the About Federated section of the website at least 15 minutes prior to register and join the call." (Watch for our News coverage of Federated's earnings call on Monday, May 2.)
