Liquidations continue in the money market mutual fund space, though there have been surprisingly few so far in 2013. Recent filings and statements from Calvert and from Hartford funds announced that both are giving up on the sector. Money funds hadn't seen an exit announcement since April, when Union Bank's HighMark funds announced its sale to Reich & Tang (see Crane Data's April 3, 2013, News, "Union Bank's HighMark to Sell MMFs to Reich and Tang Reports Reuters"). (Prior to that, the last exit was documented in our Jan. 3, 2013, News, "More Fund Liquidations: HSBC, Dreyfus T-E; More FSOC MMF Comments".) The exits could be poor timing though, as substitute ultra-short bond funds begin to show losses and outflows, and as pressures on money fund due to ultra-low rates and potentially drastic regulatory changes may finally be easing.
Calvert, which runs $733 million in MMFs (ranked 51 out of 76 managers tracked by Crane Data's MFI XLS), says in an "Update: Proposed Money Market Fund Mergers," "Recently, the boards of directors of the Calvert Tax-Free Reserves Money Market Portfolio, the Calvert Money Market Portfolio, the Calvert First Government Money Market Fund, and the Calvert Cash Reserves Institutional Prime Fund voted to merge these portfolios into the Calvert Ultra-Short Income Fund (CULAX), a taxable bond fund with a variable NAV. Pending shareholder approval, we expect these mergers to be finalized on or prior to December 31, 2013, with the completion of the mergers being staggered between late September 2013 and early December 2013."
They add, "Shareholders will have their money market shares automatically replaced with Class A shares (at NAV) of the Calvert Ultra-Short Income Fund unless, prior to the completion of the applicable merger, they either liquidate their positions in the money market funds or transfer their assets in these funds to another Calvert fund.... A meeting for record-date shareholders to vote on the proposed mergers will be held on September 20, 2013." Calvert's Ultra-Short Income Fund shows a year-to-date loss of 1.03% through 6/26/13.
Hartford, which ranks 61st among money fund managers with $415 million, comments in its Money Market Fund filing, "On June 18, 2013, the Board of Directors of The Hartford Mutual Funds, Inc. approved a Plan of Liquidation for The Hartford Money Market Fund pursuant to which the Fund will be liquidated on or about September 27, 2013.... Effective after market close on June 20, 2013, the Fund will no longer sell shares to new investors (including purchases through automatic investment plans, if any), other than purchases made through reinvestment of dividends and automatic rollovers.... The Fund's voluntary fee waivers will continue through the Liquidation Date."
The filing adds for "Traditional Individual Retirement Account, Roth IRA, SIMPLE, SEP AND 403 Plans," "Unless a shareholder provides instructions otherwise, Fund shares held on the Liquidation Date in the Fund will be exchanged for shares of The Hartford Short Duration Fund, in accordance with the amended custodial agreements, to avoid tax penalties that may be imposed if Fund shares were redeemed in cash."
In related news, bond funds, and ultra-short bond funds, have been showing losses and seeing outflows for the first time in recent memory. ICI's latest "Estimated Long-Term Mutual Fund Flows" show bond funds losing $8.0 billion in assets last week (the week ended June 19), their third straight week of declines. ICI showed bond funds losing $13.5 billion the prior week and $10.9 billion the week before. Meanwhile, retail money market funds have gained almost $20 billion in June.
A statement yesterday from TrimTabs Investment Research adds, "U.S.-listed bond mutual funds and exchange-traded funds have lost an all-time record $61.7 billion in June through Monday, June 24. This outflow far exceeds the previous record monthly outflow of $41.8 billion at the height of the financial crisis in October 2008."
