Aberdeen Standard Investments is the most recent "offshore" manager to implement changes to its money funds to align with the March 21 compliance deadline for European Money Fund Reforms. A new prospectus, which changes the official fund names from "Aberdeen" to "Aberdeen Standard," states, "Aberdeen Standard Liquidity Fund (Lux) aims to provide investors with a broad range of diversified actively-managed Funds which, through their specific investment objectives and individual portfolios, offer investors the opportunity of exposure to selected short-term investment and money market strategies. The assets of the Funds are invested in accordance with the principle of risk diversification in Money Market Instruments." We review Aberdeen's changes, and also look at the pending merger of OppenheimerFunds into Invesco, below.
Aberdeen Standard Liquidity Fund (Lux) - Public Debt Sterling Fund has been categorized as a Public Debt CNAV-MMF (Short-Term) offering with a Constant NAV at amortized cost. The LVNAV MMF (Short-Term) lineup features Aberdeen Standard Liquidity Fund (Lux) – Canadian Dollar Fund, Aberdeen Standard Liquidity Fund (Lux) – Sterling Fund, and Aberdeen Standard Liquidity Fund (Lux) – US Dollar Fund. LVNAV funds are allowed to maintain a Constant NAV, though there are proscribed conditions that require a switch to a Variable NAV. All funds in those two groupings must meet minimums of 10 percent daily and 30 percent weekly liquid assets, 60-day maximum WAMs and 120-day maximum WALs and 397-day maximum maturities for portfolio securities.
The Aberdeen Standard Liquidity Fund (Lux) – Euro Money Market Fund becomes a Standard Variable NAV MMF, with an allowed WAM of up to six months and maximum WAL of 12 months, and maximum maturity of securities at two years, with resets at 397 days. The prospectus reads, "Aberdeen Standard Liquidity Fund (Lux) – Euro Fund makes use of the transitional provisions of article 44 of the MMF Regulation and is not authorised as Money Market Fund as of the date of this Prospectus. Despite the fact that Aberdeen Standard Liquidity Fund (Lux) – Euro Fund is not authorised as MMF, it is managed in accordance with the general rule as well as the specific rules applicable in respect of LVNAV MMFs (Short-Term) ... on a voluntary basis and in accordance with the provisions of Part I of the law dated 17 December 2010 on undertakings for collective investment, as may be amended."
Also joining the Euro-based fund in the Standard VNAV MMF category are: Aberdeen Standard Liquidity Fund (Lux) – Sterling Money Market Fund and Aberdeen Standard Liquidity Fund (Lux) – US Dollar Money Market Fund. Aberdeen Standard Investments is the investment businesses of Aberdeen Asset Management and Standard Life Investments and was created by a merger completed in August 2017.
Three funds will occupy the VNAV MMF (Short-Term) space. They are Aberdeen Standard Liquidity Fund (Lux) – Seabury Euro Liquidity 1 Fun, Aberdeen Standard Liquidity Fund (Lux) – Seabury Sterling Liquidity 1 Fund, and Aberdeen Standard Liquidity Fund (Lux) – Seabury Sterling Liquidity 2 Fund. These Variable-NAV vehicles are allowed to operate with lower daily and weekly liquidity targets than LVNAV MMF (Short-Term) funds but with the same maximum WAMs and WALs, and maximum maturity of 397 days for securities held.
Fidelity also made changes to its "offshore" funds this week. As we reported previously, shareholders were notified early last month that the Flex Distributing Shares of Fidelity Institutional Liquidity Fund plc's Euro Fund would be redesignated as equivalent Accumulating Shares as of Feb. 27 to comply with provisions of the EU Money Market Fund Regulation which disallowed continued use of a share cancellation/reverse distribution mechanism. Class A and Class B Accumulating Shares of The Euro Fund were created to accommodate the share conversions. (See our Feb. 6 News, "Not Done Yet: European Money Funds Continue Adjusting to Reforms.")
For more on European Reforms, see the following Crane Data News stories: "Schwab USD LA Goes Govt Ahead of European Reforms; Weekly Holdings" (1/3/19); "Money Fund Average Breaks 2.0%, Yields Rise; BNP Splits European MMFs" (12/27/18); "Money Fund Assets Skyrocket, Break $3 Trillion; UBS on European MMFR" (12/14/18); "JPMorgan Now Live With European Money Fund Reforms; VNAVs SnP AAA" (12/4/18); and "Cash Will Be King in '19 Says GS; BlackRock Update; Europe Rejects RDM" (11/26/18). Finally, let us know if you'd like to see our latest Money Fund Intelligence International, which tracks the European money fund marketplace.
In U.S. money fund news, shareholders of four government money markets and several bond funds now operated by OppenheimerFunds are expected to vote on or about April 12 to approve the transfer of those funds to "a corresponding newly formed fund" to be managed by Invesco Advisers Inc., the result of an Oct. 18 announcement by corporate parent Massachusetts Mutual Life Insurance Co. that it had entered into an agreement for OppenheimerFunds Inc. to be acquired by Invesco Ltd. (See our Oct. 22, 2018 News, "Invesco Buying OppenheimerFunds; DWS ESG, Northern's RAVI Advertise.")
The money funds to be acquired by Invesco are Oppenheimer Government Cash Reserves, which became a government fund in September 2016 as part of SEC rule changes; Oppenheimer Government Money Fund/VA; Oppenheimer Government Money Market Fund; and Oppenheimer Institutional Government Money Market Fund.
An SEC filing dated Jan. 18 also cited Oppenheimer International Bond Fund, Oppenheimer Limited-Term Bond Fund, Oppenheimer Total Return Bond Fund, Oppenheimer Total Return Bond Fund/VA, and Oppenheimer Ultra-Short Duration Fund as among those included in the reorganization plan. The filing stated that any ETFs being transferred to Invesco will be "liquidated and dissolved" after the closing, which it stated would occur sometime during the second quarter of 2019, "or as soon as practicable thereafter."
Invesco is the 14th-largest manager of money funds with assets of $58.7 billion, while Oppenheimer is the 30th-largest manager with $8.2 billion. A combined Invesco/OppenheimerFunds would rank 13th (ahead of First American but below SSGA) with its $66.9 billion. "The joining of Invesco and OppenheimerFunds will offer clients best-in-class solutions and draw on the trusted, consultative approach that has characterized both of our companies. With this expanded, diversified suite of investment solutions, we can further help clients achieve their investment goals over the long term," said John McDonough, head of Distribution and Marketing at OppenheimerFunds.
