Dreyfus recently filed to change one of its Government money market mutual funds into a new breed of "impact" or socially responsible funds, making it the second fund to date to funnel business through minority and other "diversity" dealers. A Prospectus Supplement for the $4.6 billon Dreyfus Government Securities Cash Management Fund tells us, "The following information supplements the information contained in the section of the fund's prospectus entitled 'Shareholder Guide – General Policies': BNY Mellon Investment Adviser, Inc. generally will seek to place, over time, a majority of the aggregate dollar value of purchases and sales orders for Dreyfus Government Securities Cash Management's portfolio securities with dealers that are owned by minorities, women, disabled persons, veterans and members of other qualified and recognized diversity and inclusion groups, subject to the Adviser's duty to seek the best execution for the fund's orders." (Note: Crane Data will be hosting its European Money Fund Symposium Online, Thursday, Nov. 19 from 10am-12pm Eastern, or 3-5pmGMT.)
A document entitled, "Dreyfus Government Securities Cash Management Fund – Making an IMPACT," states, "The public's expectations of companies to respond to societal challenges and to be responsible for delivering positive contributions to society continues to evolve and grow. In the financial industry, investors may not be solely concerned about avoiding negative impacts but are often proactively seeking investments that can have a direct, positive impact on society. Simply put, "impact investing" seeks to provide investment returns that align with investor values."
It continues, "At Dreyfus Cash Investment Strategies (Dreyfus CIS), a wholly-owned subsidiary of BNY Mellon, we believe everyone can make a positive impact in their own way. For this reason and through taking cues from our own company culture, effective November 1, 2019, the Dreyfus Government Securities Cash Management Fund now seeks to place, over time, a majority of the aggregate dollar value of purchases and sales orders through dealers committed to diversity and inclusion."
Dreyfus explains, "The dealers that will be utilized are firms identified as authorized dealers by the Federal Home Loan Banks (FHLB) Office of Finance and have either been certified by one of the following: a nationally-recognized certifying organization, a national/state/or local government agency; or been self-certified if they meet one or more of the diversity criteria for inclusion." These include: Minority-Owned Business (MOB); Women-Owned Business (WOB); Disabled-Owned Business (DOB); Service-Disabled Veteran-Owned Small Business; and, Other qualified and recognized categories like Small Business Association and LGBTQ+.
The document adds, "Integrating this social element into the Dreyfus Government Securities Cash Management Fund does not change the fund's fundamental investment policy but does provide our investors an opportunity to participate in tackling certain social disparities in a direct and meaningful way." Dreyfus Government Securities Cash Management includes the following share classes: Institutional (DIPXX), Administrative (DAPXX), Investor (DVPXX) and Participant (DGPXX). Finally, they write, "Companies with a strong sense of purpose have the power to improve lives and build a stronger, more productive society. Let us all be part of the solution!"
We originally learned about the filing from the website Citywire, which wrote the brief, "Fund Files: BNY Adds ESG to Money Market Fund." Subtitled, "BNY Mellon adds impact approach to money market fund," it tells us, "BNY Mellon Investment Management has given a Dreyfus money market fund an impact twist, according to a filing with the Securities and Exchange Commission (SEC). The Dreyfus Government Securities Cash Management fund will place the majority of its purchase and sales orders 'with dealers that are owned by minorities, women, disabled persons, veterans and members of other qualified and recognized diversity and inclusion groups,' according to the filing."
It quotes Tracy Hopkins, COO of Dreyfus Cash Investment Strategies, "We live in a time where investors, large and small, are becoming more socially conscious and are looking for additional investment opportunities that can incorporate their values and beliefs into their portfolio. Against this backdrop, we have taken the step to convert the Dreyfus Government Securities Cash Management money market fund to an 'impact' fund that considers diversity and inclusion when placing purchase and sales orders with dealers."
She adds, "While socially conscious or ESG long-term mutual funds have been in existence for some time, there has traditionally not been strong demand from large cash investors due to short investment horizons. However, we are seeing this attitude changing. As such, this was a simple and impactful change that we could make to this fund given its specific investment strategy and it aligns nicely to our firm's commitment to a culture of diversity and inclusion."
Crane Data mentioned the other (so far) "Impact" Money Fund in our July 25 Link of the Day, "WSJ on Goldman 'ESG' Cash Fund," which said, "It appears you don't need to be "environmental" to be an "ESG" fund, at least according to `The Wall Street Jourbal. They write in "Apple, JetBlue Buy Goldman ESG Cash Fund," that, "Apple Inc., JetBlue Airways Corp. and other U.S. corporations are parking cash in a new socially conscious offering managed by Goldman Sachs Group Inc. The $1.5 billion money-market fund helps corporate treasurers steer money to bond brokerages operated by minorities, women and veterans.... The firm repurposed an existing money-market fund, the Goldman Sachs Financial Square Federal Instruments Fund, in December to invest in government debt, especially so-called agency notes issued by the Federal Home Loan Bank and Federal Home Loan Mortgage Corp., with an additional mandate to prioritize buying from bond dealers that are certified as being owned by minorities, women and veterans."
The Federal Home Loan Bank's "Dealer Page says, "The Office of Finance is committed to diversity and inclusion in our authorized dealer group, and actively seeks opportunities to work with dealers that are owned by minorities, women, disabled persons, veterans, and members of the lesbian, gay, bisexual, and transgender (LGBT) community. The Office of Finance promotes diverse dealer opportunities through increased access to debt programs, focused training for dealer sales and trading staff, and co-marketing programs with fixed-income investors." Examples of the FHLB's D&I Dealer Group include: Academy Securities, Blaylock Van, CastleOak Securities, Loop Capital Markets, MFR Securities, Mischler Financial Group and Stern Brothers.
For more on ESG Money Market Funds, see these Crane Data News articles: UBS Asset Mgmt Files to Launch Select ESG Prime Institutional Fund (11/4/19), Aviva Investors Discusses ESG MMFs; Fitch Rates MS ESG (11/6/19), Goldman Adds ESG Screen (11/14/19), BlackRock Launches First Offshore ESG MMF; ICS LEAF in EUR, GBP, USD (7/22/19), SSGA Goes Live with ESG Money Market Fund (7/3/19) and Cap Advisors Group Demystifies ESG Investing; Weekly Portfolio Holdings (6/19/19).
