BlackRock, one of the largest managers of money funds and one of the first to enter the ESG money fund space, has filed to launch a several more D&I dealer affiliated share classes for a number of its funds. The new Form N-1A Registration Statement filings include: Bancroft Capital Shares for BlackRock's Liquid Federal Trust Fund, Cabrera Capital Markets Shares for TempFund and BlackRock Liquid Federal Trust Fund, Mischler Financial Group Shares for BlackRock Liquid Federal Trust Fund and Bancroft Capital Shares for the BlackRock Liquid Environmentally Aware Fund (LEAF). BlackRock already offers ESG MMFs BlackRock LEAF Direct (LEDXX) and LEAF Inst (LEFXX); BlackRock Wealth LEAF Inv (PINXX) and Inst (PNIXX); and BlackRock Liquidity FedFund Mischler (HUAXX) shares. (We learned about the filing from mutual fund reporter Fund Intelligence.)
The first filing explains, "Cabrera Capital Markets Shares are only available for purchase by clients of Cabrera Capital Markets LLC and its affiliates. To open an account with the Fund, contact Cabrera Capital Markets LLC by telephone (312-236-8888) or by e-mail at mminfo@cabreracapital.com." The shares list a $3 million minimum and add the disclaimer, "If you purchase shares of TempFund through a broker-dealer or other Financial Intermediary, such as Cabrera Capital Markets LLC, the Fund and BlackRock Investments, LLC, the Fund’s distributor, or its affiliates may pay the Financial Intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other Financial Intermediary and your individual financial professional to recommend the Fund over another investment."
It adds, "Bancroft Capital Shares are only available for purchase by clients of Bancroft Capital, LLC and its affiliates. To open an account with the Fund, contact Bancroft Capital, LLC by telephone (484-546-8000) or by e-mail at ops@bancroft4vets.com."
The filing for TempFund says about "Environmental, Social and Governance ('ESG') Integration," "Although TempCash and TempFund do not seek to implement a specific ESG, impact or sustainability strategy unless disclosed in the Funds' prospectuses, BlackRock will consider ESG characteristics in the credit research and investment process for TempCash and TempFund. All securities purchases by TempCash and TempFund are selected from approved lists maintained by BlackRock. All instruments on an approved list used by TempCash and TempFund have met the minimal credit risk requirement of Rule 2a-7. In reviewing instruments, BlackRock will consider the capacity of the issuer or guarantor to meet its obligations. BlackRock considers ESG data within the total data available during its review. This may include third party research as well as considerations of proprietary BlackRock research across environmental, social and governance risk and opportunities regarding an issuer."
It continues, "ESG characteristics are not the sole consideration when making investment decisions for TempCash or TempFund. TempCash and TempFund may invest in issuers that do not reflect the beliefs or values with respect to ESG of any particular investor. BlackRock will consider those ESG characteristics it deems relevant or additive when making investment decisions for TempCash or TempFund. The ESG characteristics utilized in TempCash and TempFund's investment processes may evolve over time and one or more characteristics may not be relevant with respect to all issuers that are eligible for investment. While BlackRock views ESG considerations as having the potential to contribute to TempCash and TempFund's long-term performance, there is no guarantee that such results will be achieved. TempCash and TempFund may incorporate certain specific ESG considerations into their investment objectives, strategies and/or processes, as described in the prospectuses."
The filings also comment on the "Conversion of Bancroft Capital Shares to Institutional Shares," explaining, "Bancroft Capital Shares are only available for purchase by clients of Bancroft Capital, LLC and its affiliates. If you are no longer a client of Bancroft Capital, LLC, you are not eligible to hold Bancroft Capital Shares and any Bancroft Capital Shares you hold will be converted to Institutional Shares of the same Fund.... The Bancroft Conversion will occur on the basis of the relative NAV of the shares of the two applicable classes on the date of conversion, without the imposition of any sales load, fee or other charge. The Bancroft Conversion will not be deemed a purchase or sale of the shares for U.S. federal income tax purposes. Shares acquired through reinvestment of dividends on Bancroft Capital Shares will also convert to Institutional Shares."
On the "Conversion of Cabrera Capital Markets Shares to Institutional Shares," the filing comments, "Cabrera Capital Markets Shares are only available for purchase by clients of Cabrera Capital Markets LLC and its affiliates. If you are no longer a client of Cabrera Capital Markets LLC, you are not eligible to hold Cabrera Capital Markets Shares and any Cabrera Capital Markets Shares you hold will be converted to Institutional Shares of the same Fund.... The Cabrera Conversion will occur on the basis of the relative NAV of the shares of the two applicable classes on the date of conversion, without the imposition of any sales load, fee or other charge. The Cabrera Conversion will not be deemed a purchase or sale of the shares for U.S. federal income tax purposes. Shares acquired through reinvestment of dividends on Cabrera Capital Markets Shares will also convert to Institutional Shares."
It also describes the "Conversion of Mischler Financial Group Shares to Institutional Shares," telling us, "Mischler Financial Group Shares are only available for purchase by clients of Mischler Financial Group, Inc. and its affiliates. If you are no longer a client of Mischler Financial Group, Inc., you are not eligible to hold Mischler Financial Group Shares and any Mischler Financial Group Shares you hold will be converted to Institutional Shares of the same Fund."
Crane Data currently tracks 28 Social, ESG, Minority or Veteran-affiliated MMFs with $64.5 billion (as of 7/31/21), representing 1.3% of the total $4.8 trillion in taxable MMFs. Social or "Impact" MMFs (all Govt MMFs) total $21.6 billion and include: Dreyfus Govt Sec Cash Instit (DIPXX, $4.2B), Federated Hermes Govt Ob Tax-M IS (GOTXX, $6.8B), Goldman Sachs FS Fed Instr Inst (FIRXX, $2.7B) and Morgan Stanley Inst Liq Govt Sec Inst (MUIXX, $12.1B). ESG MMFs (All Prime) total $9.0B and include: BlackRock LEAF Direct (LEDXX, $1.2B), BlackRock Wealth LEAF Inv (PINXX, $1.8B), DWS ESG Liquidity Inst (ESGXX, $570M), Morgan Stanley Inst Liq ESG MMP I (MPUXX, $3.4B), State Street ESG Liq Res Prem (ELRXX, $1.3B) and UBS Select ESG Prime Inst Fund (SGIXX, $688M).
Social and Veteran-Affiliated MMF Share Classes (Prime and Govt) total $34.0B and include: BlackRock Lq FedFund Mischler (HUAXX, $689M), Goldman Sachs FS Govt Drexel Hamilton (VETXX, $6.0B), Goldman Sachs FS Prm Ob Drexel Hamilton (VTNXX, $31M), Invesco Govt & Agency Cavu (CVGXX, $1.4B), Invesco Liquid Assets Cavu (CVPXX, $1M), Invesco Treasury Cavu (CVTXX, $509M), JPMorgan 100% US Trs MM Academy (JACXX, $110M), JPMorgan Prime MM Academy (JPAXX, $1.1B), JPMorgan Prime MM Empower (EJPXX, $1M), JPMorgan US Govt MM Academy (JGAXX, $9.5B), JPMorgan US Govt MM Empower (EJGXX, $2.8B), JPMorgan US Trs Plus MM Academy (JPCXX, $1M), Morgan Stanley Inst Liq ESG MMP CastleOak (OAKXX, $255M), Morgan Stanley Inst Liq Govt CastleOak (COSXX, $572M) and Northern Instit Govt Select SWS (WCGXX, $10.9B). (Some other funds are pending, including: HSBC ESG Prime.)
For more on ESG and "Social" MMFs, see these Crane Data News pieces: "Northern Renames Diversity Shares Siebert Williams; Safened Platform (4/20/21); "Morgan Stanley Files for CastleOak Shares; Bond Fund Symposium Today" (3/25/21); "JP Morgan Launches "Empower" Share Class to Support Minority Banks" (2/24/21); "Invesco Files for Cavu Secs Class" (12/18/20); "ESG and Social MMF Update: Mischler News, Green Deposits, Reg Debate" (12/4/20); "Goldman Launches Social Class; Tiedemann Adds FICA; CS Green ABCP" (1/24/20); "Mischler Financial Joins "Impact" or Social Money Market Investing Wave" (12/5/19); and "Dreyfus Launches "Impact" or Diversity Government Money Market Fund" (11/21/19).
Finally, click here to see the Federal Home Loan Bank Office of Finance's list of D&I or diversity and inclusion, dealers. The page explains, "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. To become a member of the OF's Diversity and Inclusion (D&I) Dealer Group, you are invited to apply to be an authorized dealer for FHLBank debt securities, and your firm should be certified by a nationally-recognized certifying organization, by a national, state, or local government agency, or be self-certified as meeting one of the diversity criteria for inclusion. To learn more about becoming a member of the Office of Finance's D&I Dealer Group, contact us."
The current "D&I Dealer Group" includes: Academy Securities, Inc., Alamo Capital, ASL Capital Markets Inc., Bancroft Capital, LLC, Blaylock Van, LLC, Cabrera Capital Markets, LLC, CastleOak Securities, L.P., Drexel Hamilton, LLC, Great Pacific Securities, Loop Capital Markets LLC, MFR Securities, Inc., Mischler Financial Group, Inc., Multi-Bank Securities, Inc., Penserra Securities LLC, R. Seelaus & Co., LLC, Rice Securities, LLC, Samuel A. Ramirez & Company, Inc., Siebert Williams Shank & Co., LLC (SWS), Stern Brothers & Co. and Tribal Capital Markets, LLC.
