Ignites on Schwab MF Changes
Mutual fund publication Ignites reports, "Schwab Lays Out Money Fund Changes in Broad Strokes." The article says, "With a Friday announcement, Charles Schwab Investment Management became the latest in a string of money market fund sponsors to disclose product changes it's planning in response to SEC reforms introduced last July. The San Francisco–based firm said that it will continue to offer prime, municipal and government money funds for retail investors. Its lineup will also include prime institutional funds, which under the SEC's new rules must adopt a fluctuating net asset value, or let their price per share fluctuate from $1 per share. Like Invesco, Federated, JPMorgan and others, Schwab also stated that it will not implement redemption gates or liquidity fees for its government money market funds." It continues, "The firm's plan to offer prime institutional funds is somewhat surprising because most of its money fund assets are retail, says Peter Crane, CEO of Crane Data. Just 2.3% of the firm's assets, or $3.6 billion, are institutional. With $160.6 billion in money fund assets, the firm is the seventh-largest sponsor of the products, according to Crane Data. Schwab did not provide details in its announcement about upcoming changes to specific funds, and declined to comment beyond its release. While some other large money fund sponsors have laid out several specific elements of their plans, others have taken a more reticent approach to describing changes. The compliance date for the biggest changes is not until October 2016, which gives firms about a year and a half to make changes and disclose details." It adds, "[W]e still don't know if there's going to be big dollars switched into government [funds] like we saw with Fidelity," says Crane, referring to Schwab's announcement.... It doesn't look as if Schwab is following Fidelity's lead by converting its biggest prime funds to government funds, "but we're not sure about that yet," he says <b:>`_." In other news, law firm Paul Hastings LLP posted an article on the SEC FAQS called, "SEC Releases Frequently Asked Questions Related to Valuation Guidance and to Money Market Fund Reforms Adopted in July 2014." Finally, the New York Fed posted a commentary, "Interest-Bearing Securities When Interest Rates are Below Zero" on its Liberty Street Economics blog.
