Last year, we saw Federated take over PNC's fund business and Invesco absorb OppenheimerFunds, and now it appears we'll see more fund consolidation in 2020. A press release entitled, "Franklin Templeton to Acquire Legg Mason, Creating $1.5 Trillion AUM Global Investment Manager," tells us, "Franklin Resources ... operating as Franklin Templeton ... announced that it has entered into a definitive agreement to acquire Legg Mason, Inc.... The acquisition of Legg Mason and its multiple investment affiliates ... will establish Franklin Templeton as one of the world's largest independent, specialized global investment managers with a combined $1.5 trillion in assets.... The combined footprint of the organization will significantly deepen Franklin Templeton's presence in key geographies and create an expansive investment platform that is well balanced between institutional and retail client AUM."
Franklin Templeton President & CEO Jenny Johnson comments, "This acquisition will add differentiated capabilities to our existing investment strategies with modest overlap across multiple world-class affiliates, investment teams and distribution channels, bringing notable added leadership and strength in core fixed income, active equities and alternatives. We will also expand our multi-asset solutions, a key growth area for the firm amid increasing client demand for comprehensive, outcome-oriented investment solutions."
Joseph Sullivan, Chairman & CEO of Legg Mason, adds, "The incredibly strong fit between our two organizations gives me the utmost confidence that this transaction will create meaningful long-term benefits for our clients and provide our shareholders with a compelling valuation for their investment. By preserving the autonomy of each investment organization, the combination of Legg Mason and Franklin Templeton will quickly leverage our collective strengths, while minimizing the risk of disruption. Our clients will benefit from a shared vision, strong client-focused cultures, distinct investment capabilities and a broad distribution footprint in this powerful combination."
CNBC writes in "Franklin Resources to buy Legg Mason, forming $1.5 trillion asset manager," "Franklin Resources announced Tuesday a deal to buy rival asset manager Legg Mason, a tie-up that could help each navigate a worldwide shift in investor preference away from active money management.... Baltimore-based Legg Mason, which manages $803.5 billion, operates nine investment managers that do business under separate brands.... San Mateo, California-based Franklin, meanwhile, has $698 billion in assets and manages a host of equity and bond investments under the Franklin Templeton brand."
In the money market mutual fund space, Franklin Templeton is a minor player with just $18.1 billion in assets (ranking 21 out of 67 managers). Meanwhile, Legg Mason's Western Asset Management ranks 18th among fund families tracked by Crane Data with $22.9 billion under management. When combined (likely much later in 2020), the two will manage a total of $41.0 billion, which would rank 18th (behind T. Rowe Price). (See also these Crane Data News stories: Franklin Merges Money Funds (12/4/19) and Franklin Files for Blockchain Enabled U.S. Govt Money Market Fund (9/4/19).")
Also, both Charles Schwab and BlackRock are merging and liquidating a number of money market funds. A Prospectus Supplement filing for Schwab Retirement Advantage Money Fund and the Schwab Investor Money Fund tells us, "The Board of Trustees (the Board) of The Charles Schwab Family of Funds (the Trust) has determined that it is in the best interests of each of the Schwab Retirement Advantage Money Fund and Schwab Investor Money Fund (each, a Target Fund and collectively, the Target Funds), each a series of the Trust, and their respective shareholders to reorganize with and into the Schwab Value Advantage Money Fund (the Surviving Fund). Accordingly, the Board has approved Agreements and Plans of Reorganization (the Plans of Reorganization) that would provide for the reorganization of each of the Target Funds into the Surviving Fund. The Surviving Fund has the identical investment objective and investment strategy to that of each of the Target Funds."
It continues, "The Plans of Reorganization approved by the Board sets forth the terms by which each of the Target Funds will transfer its assets and liabilities to the Surviving Fund in exchange for Investor Shares of the Surviving Fund, and subsequently distribute those Surviving Fund shares to shareholders of each of the Target Funds (the Reorganization). After the Reorganization is consummated, shareholders of each of the Target Funds will become shareholders of the Surviving Fund. The Reorganization is intended to be tax-free, meaning that shareholders of each of the Target Funds will become shareholders of the Surviving Fund without realizing any gain or loss for federal income tax purposes and the Reorganization will be tax-free."
The Supplement adds, "Shareholder approval of the Reorganization is not required. Shareholders of each of the Target Funds will receive a prospectus/information statement prior to the Reorganization that describes the investment objective, strategies, expenses and risks of an investment in the Surviving Fund and provides further details about the Reorganization. It is expected that the Reorganization will occur on or about February 24, 2020. The investment adviser will bear the costs associated with the Reorganization."
A shareholder communication from Schwab tells fund investors, "Enclosed is important information concerning your investment in the Schwab Investor Money Fund and/or Schwab Retirement Advantage Money Fund (each, an 'Acquired Fund' and collectively, the 'Acquired Funds'). We wish to inform you that the Board of Trustees (the 'Board') of The Charles Schwab Family of Funds (the 'Trust'), after careful consideration, has separately approved the reorganization of each Acquired Fund into the Schwab Value Advantage Money Fund (the 'Surviving Fund' and, together with the Acquired Funds, the 'Funds'), another fund of the Trust that has a substantially similar investment objective and investment strategies."
It adds, "Following the close of business on or about February 21, 2020, each Acquired Fund will be reorganized into the Surviving Fund such that each shareholder of the Acquired Funds will receive an amount of the Investor Shares of the Surviving Fund equal in value to the shares of the Acquired Fund(s) owned by such holder at the time of the closing of the reorganizations."
An SEC filing for BlackRock Premier Government Institutional Fund, BlackRock Select Treasury Strategies Institutional Fund and FFI Government Fund explains, "On November 12, 2019, the Board of Trustees of Funds For Institutions Series, on behalf of each Fund, approved a proposal to liquidate and terminate each Fund subject to a Plan of Liquidation and Termination. The Plan of Liquidation and Termination will be presented to the shareholders of each Fund and must be approved by the requisite number of shares of each Fund before a liquidation and termination of a Fund can occur."
It explains, "Joint special meetings of shareholders of each Fund to consider the Plan of Liquidation and Termination are expected to be held on February 10, 2020. The record date for the joint special meetings is December 13, 2019. If approved by shareholders of a Fund, the liquidation date for such Fund is expected to be on or around February 13, 2020. The approval of the Plan of Liquidation and Termination with respect to each Fund is not contingent upon the approval of the Plan of Liquidation and Termination with respect to any other fund."
For more on Liquidations and Consolidation, see these Crane Data News pieces: Federated Completes $11.3B Acquisition of PNC's Money Market Funds (11/20/19), June MFI: Consolidation, Morgan Stanley Ultra Short, Fin-Tech Invasion (6/7/19), Oppenheimer Funds Now Invesco Oppenheimer; Dreyfus Keeping Name (6/3/19), Nov. MFI: Consolidation, Vanguard's Smith, Yields Break 2.0 Percent (11/7/18), Invesco Buying Oppenheimer Funds; DWS ESG, Northern's RAVI Advertise (10/22/18), More MFs Liquidate: Calvert, Hartford Exit; Bad Timing for Bond Funds (6/27/13) and More Fund Liquidations: HSBC, Dreyfus T-E; More FSOC MMF Comments (1/3/13).
