Charles Schwab Investment Management, the 7th largest money market fund manager with $160.7 billion in assets, is the latest money market mutual fund complex to issue a statement in response to the SEC's pending money market fund reforms. A press release sent out Friday morning entitled, "Charles Schwab Investment Management Issues Statement on Money Market Fund Reform," doesn't reveal many specifics in terms of Schwab's intentions, but it does say they won't impose gates and fees on their government MMFs and will have a full range of MMF offering, including floating NAV funds. Schwab also reaffirmed that they will continue to offer Prime and Municipal sweep options, and, unlike Fidelity with its Cash Reserves funds, won't switch their flagship retail Prime funds to government funds.
The release summarizes, "Schwab Government Money Funds do not plan to adopt a policy to implement Liquidity Fees or Redemption Gates. Retail investors will continue to have access to Schwab Prime, Municipal and Government money market funds with a net asset value (NAV) that is designed to be constant (CNAV). `We are committed to providing capital preservation and liquidity products that will meet the needs of both retail and institutional investors." They say, "As a leader in money market fund reform, Charles Schwab Investment Management is committed to providing all investors with as much clarity as possible on the impact and implications of the money market fund reform issued by the Securities and Exchange Commission in July, 2014."
It continues, "We have spent significant time reviewing the amendments and listening to our investors' preferences. We want to assure our retail and institutional shareholders that we will continue to offer a variety of investment options and a robust product lineup that includes Prime, Municipal and Government money market funds. Specifically, retail investors will continue to have access to a lineup of Schwab Prime, Municipal and Government money market funds with a CNAV. For those no longer eligible for our CNAV Prime and Municipal money market funds under the new money market fund reform amendments, we plan to make floating NAV money funds available. At this time, our Board of Trustees has elected not to implement liquidity fees or redemption gates on Schwab Government money market funds."
A spokesperson for Schwab commented to Crane Data (in response to our questions), "We are committed to providing our clients a wide array of choices in how they manage their portfolios. Clients in Prime or Municipal MMFs who will be eligible for "Retail" funds and who continue to meet Schwab's MMF Sweep Feature criteria will stay in the Cash Feature they have selected. Should a client be interested in changing their Cash Feature, they are welcome to do so subject to any Money Fund or Schwab eligibility requirements. You should expect to see filings designed to ensure all of our existing Prime and Municipal funds remain "Retail," as well as filings for new "Institutional" funds, as appropriate."
Crane Data tracks 31 Schwab funds, 16 Taxable and 15 Tax-Exempt. The largest of the Schwab funds is $39.3 billion Schwab Cash Reserves Fund (SWSXX), a Prime Retail fund. It is the third largest Prime Retail fund we track, behind Fidelity Cash Reserves ($113B) and Vanguard Prime ($103B). It is the 5th largest money market fund overall. The next largest fund in their lineup is Schwab Government Money Market Fund with $22.6 billion, followed by Schwab Advisor Cash Reserves Prem with $22.3 billion. Other large Schwab MMFs include Schwab US Treasury Money Fund ($20.4 billion), Schwab Money Market Fund ($14.7 billion), Schwab Municipal MF ($13.0 billion, the second largest Tax Exempt fund Crane Data tracks), Schwab Value Advisor MF ($10.7 billion), and Schwab CA Municipal MF Sweep ($7.3 billion).
We also noticed that the $1.2 billion Schwab Treasury Obligations Money Fund has been closed to new investors, according to a notice on Schwab's site and a recent SEC filing. Finally, watch for the May issue of our Money Fund Intelligence newsletter, which ships on Thursday, for a summary of all the MMF changes that have been announced so far. About 10 firms have released statements, including 7 of the 10 largest money fund managers, and we'll review and list the links in our latest update.
