A press release entitled, "Morgan Stanley Investment Management Partners with Opportunity Finance Network on the Newly Launched Impact Class of Money Market Fund Shares," tells us, "Morgan Stanley Investment Management (MSIM) announced ... it has selected Opportunity Finance Network (OFN) as its diversity and inclusion partner for MSIM's charitable contribution related to the newly launched Impact Class. OFN is a leading national network of 370 community development finance institutions (CDFIs) that works to ensure communities underserved by mainstream finance have access to affordable, responsible financial products and services." (For more on ESG and Social MMFs, see our Sept. 19 News, "SSGA to Liquidate State Street ESG Liquid Reserves," our May 12 News (with hotlinks at the end), "UBS AM Explains Sustainability in Liquidity; Federated Adds SGD Shares," and watch for ESG MMF comments from this week's AFP conference in Philadelphia in coming days.)
It continues, "The Impact Classes are share classes available in two of MSIM's institutional money market funds. They contain a contribution feature in which MSIM, out of its own profits from managing the Impact Classes, provides support to organizations that focus on affordable housing, children's health and nutrition and education among other diversity, equity and inclusion (DE&I) initiatives. Under this new partnership, MSIM will make an annual contribution to OFN's Finance Justice Fund, an OFN initiative that aims to bring $1 billion in capital from corporate and philanthropic partners to historically underinvested communities."
Navindu Katugampola, MSIM's Head of Sustainable Investing, comments, "MSIM chose OFN as a partner because it is uniquely positioned to help money flow to people and places where traditional financing doesn't reach."
Opportunity Finance Network's Beth Lipson states, "We are deeply grateful for Morgan Stanley Investment Management's support of our Finance Justice Fund.... Its contributions will help us achieve the goal of the Finance Justice Fund, which is to close the racial wealth gap and accelerate the work of our member CDFIs investing in affordable housing, health centers, schools, and other anchors of the vibrant communities where we all wish to live."
MSIM also says, "The Impact Classes are available to direct institutional investors in Morgan Stanley Institutional Liquidity Funds Government (IMPXX) and Prime (IMPTXX) portfolios. They are designed to help institutional liquidity investors achieve their primary investment objectives of principal stability, liquidity, and income while at the same time advancing their DE&I goals. MSIM will contribute at least 0.02% of the net annualized assets under management in the Impact Class shares to support DE&I initiatives."
They tell us, "The Impact Classes represent the latest in the series of innovative share classes and product structures across the Morgan Stanley Institutional Liquidity Funds money market fund lineup that are designed to assist DE&I and environmental, social and governance (ESG) conscious liquidity investors. Investors interested in the Impact Class may also be interested in the CastleOak Shares which were launched last year in partnership with CastleOak Securities, L.P., a leading minority-owned boutique investment bank, whose giving back philanthropy focuses on community, professional development and education."
Finally, the release adds, "Opportunity Finance Network (OFN) is a leading national network of more than 370 community development financial institutions (CDFIs), specialized lenders that provide affordable, responsible financial products and services in low-income rural, urban, and Native communities nationwide. As a trusted intermediary between CDFIs and the public and private sectors, OFN works with its partners -- banks, philanthropies, corporations, government agencies and others -- to create economic opportunity for all by strengthening and investing in CDFIs."
Crane Data currently tracks 38 Social, ESG, Minority or Veteran-affiliated MMFs with $77.3 billion (as of 9/30/22), representing 1.5% of the total $5.031 trillion in MMFs. (The Social & ESG MMF total is down from $87.8 billion as of 12/31/21.) Social or "Impact" MMFs (all Govt MMFs) total $27.7 billion and include: BlackRock Liq FedTust Inst (TFFXX, $5.7B), Dreyfus Govt Sec Cash Instit (DIPXX, $3.3B), Federated Hermes Govt Ob Tax-M IS (GOTXX, $6.6B), Goldman Sachs FS Fed Instr Inst (FIRXX, $3.0B) and Morgan Stanley Inst Liq Govt Sec Inst (MUIXX, $9.1B). ESG MMFs (All Prime) total $10.1B and include: BlackRock LEAF Direct (LEDXX, $1.2B), BlackRock Wealth LEAF Inv (PINXX, $1.3B), DWS ESG Liquidity Inst (ESGXX, $533M), Morgan Stanley Inst Liq ESG MMP I (MPUXX, $3.7B), State Street ESG Liq Res Prem (ELRXX, $712M) and UBS Select ESG Prime Inst Fund (SGIXX, $2.6B).
Social and Veteran-Affiliated MMF Share Classes (Prime and Govt) total $39.6B and include: BlackRock Lq FedFund Mischler (HUAXX, $1.2B), Dreyfus Govt Cash Mgmt BOLD (DBLXX, $2.3B), Federated Hermes Govt Obligs SDG (GPHXX, $647M), Goldman Sachs FS Govt Drexel Hamilton (VETXX, $6.2B), Goldman Sachs FS Prm Ob Drexel Hamilton (VTNXX, $50M), Invesco Govt & Agency Cavu (CVGXX, $6.2B), Invesco Liquid Assets Cavu (CVPXX, $1M), Invesco Treasury Cavu (CVTXX, $444M), JPMorgan 100% US Trs MM Academy (JACXX, $261M), JPMorgan 100% US Trs MM Empower (EJTXX, $22M), JPMorgan Prime MM Academy (JPAXX, $577M), JPMorgan Prime MM Empower (EJPXX, $406M), JPMorgan US Govt MM Academy (JGAXX, $8.9B), JPMorgan US Govt MM Empower (EJGXX, $5.9B), JPMorgan US Trs Plus MM Academy (JPCXX, $176M), JPMorgan US Trs Plus MM Empower (EJUXX, $104M), Morgan Stanley Inst Liq ESG MMP CastleOak (OAKXX, $251M), Morgan Stanley Inst Liq Govt CastleOak (COSXX, $361M), Morgan Stanley Inst Liq Govt Impact (IMPXX, $581M), Northern Instit Govt Select SWS (WCGXX, $2.0B), State Street Inst Treasury Plus Opp (OPTXX, $34M), State Street Inst US Govt Bancroft (VTGXX, $400M), State Street Inst US Govt Blaylock (BUYXX, $151M) and State Street Inst US Govt Opp (OPGXX, $2.4B).
For more on ESG and "Social" MMFs, see these Crane Data News pieces: "Dreyfus Announces New BOLD D&I Share Class with Howard University" (3/1/22), "SSGA Debuts Opportunity Class; BlackRock Bancroft, Cabrera Shares Live" (11/17/21); "More D&I: State Street Files for Blaylock Van Shares; WSJ Hits Tether" (10/27/21); "BlackRock Expands ESG Lineup; Files for New Bancroft, Cabrera Shares" (8/19/21); "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); "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). Click here to see the Federal Home Loan Bank Office of Finance's list of D&I or diversity and inclusion, dealers.
In related news, a Prospectus Supplement for Morgan Stanley Institutional Liquidity Funds: ESG Money Market Portfolio states, "Effective on or about January 23, 2023, the Fund will operate as a 'retail money market fund,' as defined in Rule 2a-7 under the Investment Company Act of 1940, as amended. A 'retail money market fund' is defined as a money market fund that has policies and procedures reasonably designed to limit all beneficial owners of the fund to natural persons. As a result, investments in the Fund will be limited to shareholder accounts beneficially owned by natural persons. Before the Effective Date, Morgan Stanley Distribution, Inc., the Fund's principal distributor, and authorized financial intermediaries will be required to take steps to remove any shareholder accounts that are not beneficially owned by natural persons and notify the Fund of any such accounts that continue to own shares of the Fund."
It states, "Although the Fund's conversion to a retail money market fund will not result in any change to the Fund's investment objective or changes to its principal investment strategies other than those resulting from its conversion to a retail money market fund, the conversion will result in certain other important changes summarized below. A prospectus for the Fund reflecting these and other related changes will be provided to the Fund's shareholders in connection with the conversion to a retail money market fund."
The filing adds, "The Fund currently operates as an 'institutional money market fund,' which is neither a 'government money market fund' nor 'retail money market fund' as such terms are defined or interpreted under Rule 2a-7 under the Investment Company Act of 1940, as amended. As such, the Fund is required to price and transact in its shares at a net asset value per share reflecting market-based values of its portfolio holdings (i.e., at a "floating" net asset value per share), rounded to a minimum of the fourth decimal place. Like other money market funds of its type, the Fund is subject to the possible imposition of liquidity fees and/or redemption gates."
