We've recently seen a handful of "green" or "ESG" money market funds enter the market. But we're now seeing another kind of "green" fund, Army green, in the form of the first veteran-affiliated money market fund. A press release entitled, "Academy Securities and JP Morgan Announce New Money Market Funds," tells us that, "Academy Securities, a registered broker-dealer, certified Disabled Veteran Business Enterprise (DVBE), and Minority Business Enterprise (MBE), today announced the launch of the Academy Share Class of the JP Morgan Prime Money Market Fund (JPAXX) and JP Morgan U.S. Government Money Market Fund (JGAXX)."
It explains, "The product offering delivers the experience, expertise, and performance of the JP Morgan Asset Management team, while serving as a solution to cash management investors who share in the support of Academy Securities' social mission to mentor, train, and hire transitioning veterans. The partnership between JPM and Academy exemplifies the intersection between capabilities and authentic diversity."
Academy Chairman & CEO Chance Mims comments, "We are very excited to launch this new share class initiative with JP Morgan, a best in class asset management platform." President Phil McConkey says, "Academy will keep seeking new ways like this to better serve our clients, while also being focused on helping our nation's returning heroes transition to the civilian work force."
The release tells us, "The Academy Share Class of the JP Morgan Money Market Funds are managed by JP Morgan Asset Management. Both funds aim to preserve capital, maintain liquidity and produce a competitive yield."
John Donohue, CEO & CIO of the J.P. Morgan Asset Management Global Liquidity Business, adds, "We are proud to be working with Academy Securities to launch this share class supporting our joint mission to mentor, train and hire transitioning US Military Veterans."
The press release states, "Academy Securities is a preeminent disabled veteran owned investment bank with strength in capital markets, public finance, fixed income and equity trading. Leadership and staff have had intensive military training prior to entering and gaining in depth financial services experience in global capital markets." (See our Feb. 5 Link of the Day," "McQuillen, Tarditi Join Academy Secs and the release, "Former General Electric Managing Director Matt McQuillen JoinsAcademy Securities.")
The Form N-1A Registration Statement for the Academy Class Shares of JPMorgan Prime Money Market Fund and JPMorgan U.S. Government Money Market Fund shows that both funds' expense ratios will be 0.18% after a 3bps waiver. It says about the Prime Money Market Fund, "The Fund invests in high quality, short-term money market instruments which are issued and payable in U.S. dollars. The Fund principally invests in: High quality commercial paper and other short-term debt securities, including floating and variable rate demand notes of U.S. and foreign corporations, Debt securities issued or guaranteed by qualified U.S. and foreign banks, including certificates of deposit, time deposits and other short-term securities, Securities issued or guaranteed by the U.S. government, its agencies or instrumentalities or Government-Sponsored Enterprises ('GSEs'), Asset-backed securities, Repurchase agreements, and Taxable municipal obligations."
JP Morgan explains, "The Fund is a money market fund managed in the following manner: The Fund calculates its net asset value to four decimals (e.g., $1.0000) using market-based pricing and operates with a floating net asset value. The dollar-weighted average maturity of the Fund will be 60 days or less and the dollar-weighted average life to maturity will be 120 days or less. The Fund will only buy securities that have remaining maturities of 397 days or less or securities otherwise permitted to be purchased because of maturity shortening provisions under applicable regulation. The Fund invests only in U.S. dollar-denominated securities [and] The Fund seeks to invest in securities that present minimal credit risk."
They continue, "The Fund may invest significantly in securities with floating or variable rates of interest.... [U]nder normal conditions, the Fund will invest at least 25% of its total assets in securities issued by companies in the banking industry. The Fund may, however, invest less than 25% of its total assets in this industry as a temporary defensive measure. The Fund may trade securities on a when-issued, delayed settlement or forward commitment basis. The Fund's adviser seeks to develop an appropriate portfolio by considering the differences in yields among securities of different maturities, market sectors and issuers."
Regarding "Liquidity Fees and Redemption Gates," the filing tells us, "The Fund's policies and procedures permit the Board to impose liquidity fees on redemptions and/or redemption gates in the event that the Fund's weekly liquid assets were to fall below a designated threshold. If the Fund's weekly liquid assets fall below 30% of its total assets, the Board, in its discretion, may impose liquidity fees of up to 2% of the value of the shares redeemed and/or gates on redemptions. In addition, if the Fund's weekly liquid assets fall below 10% of its total assets at the end of any business day, the Fund must impose a 1% liquidity fee on shareholder redemptions unless the Board determines that not doing so is in the best interests of the Fund."
For the "U.S. Government Money Market Fund's Investment Strategies," they write, "Under normal conditions, the Fund invests its assets exclusively in: Debt securities issued or guaranteed by the U.S. government, or by U.S. government agencies or instrumentalities or Government-Sponsored Enterprises ('GSEs'), and Repurchase agreements fully collateralized by U.S. Treasury and U.S. government securities."
The filing adds, "The Fund is a money market fund managed in the following manner: The Fund seeks to maintain a net asset value ('NAV') of $1.00 per share. The dollar-weighted average maturity of the Fund will be 60 days or less and the dollar-weighted average life to maturity will be 120 days or less. The Fund will only buy securities that have remaining maturities of 397 days or less or securities otherwise permitted to be purchased because of maturity shortening provisions under applicable regulation. The Fund invests only in U.S. dollar-denominated securities. The Fund seeks to invest in securities that present minimal credit risk."
It explains, "The Fund intends to continue to qualify as a 'government money market fund,' as such term is defined in or interpreted under Rule 2a-7 under the Investment Company Act of 1940, as amended.... 'Government money market funds' are required to invest at least 99.5% of their assets in (i) cash, (ii) securities issued or guaranteed by the United States or certain U.S. government agencies or instrumentalities and/or (iii) repurchase agreements that are collateralized fully, and are exempt from requirements that permit money market funds to impose a liquidity fee and/or temporary redemption gates. While the J.P. Morgan Funds' Board of Trustees ... may elect to subject the Fund to liquidity fee and gate requirements in the future, the Board has not elected to do so at this time."
