Charles Schwab Investment Management posted a notice, "Announcing Lower Minimums and Expenses for Schwab Money Funds," earlier this month that reveals a series of changes to the advisor's money market funds. It says, "Effective October 3, 2017, initial investment minimums and Net Operating Expense Ratios (OERs) will be reduced for all Schwab Purchased Money Funds. Certain money fund share classes will also be closed or renamed so that "Investor Shares" refers to share classes with no initial investment minimum and "Ultra Shares" refers to share classes with a $1 million initial investment minimum, simplifying the Schwab Money Funds product line up." (See our Oct. 23 Link of the Day, "Schwab Earnings Talk MMFs," and see a Schwab filing here.)
The piece explains, "On or about November 17, 2017, shareholders in Schwab Value Advantage Money Fund – Select Shares and Premier Shares will be consolidated into Schwab Value Advantage Money Fund - Ultra Shares. Shareholders in Schwab Municipal Money Fund – Select Shares will be consolidated into Schwab Municipal Money Fund – Ultra Shares (formerly, Premier Shares). No action is required by existing shareholders."
Changes to the "Schwab Purchased Money Funds Line Up, which took effect October 3, 2017, include: Schwab Value Advantage Money Fund - Investor Shares (SWVXX) now has no minimum investment and an expense ratio of 0.35%; Schwab Value Advantage Money Fund - Ultra-Shares (SNAXX) now has a minimum initial investment of $1 million and an expense ratio of 0.19%; Schwab Government Money Fund - Investor Shares (SNVXX) now has no minimum initial investment and an expense ratio of 0.35%; and, Schwab Treasury Obligations Money Fund - Investor Shares (SNOXX) now has no minimum initial investment and an expense ratio of 0.35%.
Additional changes are as follows: Schwab Municipal Money Fund - Investor Shares (SWTXX) now has no minimum initial investment and an expense ratio of 0.35%; Schwab Municipal Money Fund - Ultra Shares (SWOXX) now has a minimum initial investment of $1 million and an expense ratio of 0.19%; Schwab AMT Tax-Free Money Fund - Investor Shares (SWWXX) has no minimum initial investment and an expense ratio of 0.35%; Schwab CA Municipal Money Fund - Investor Shares (SWKXX) now has no minimum initial investment and an expense ratio of 0.35%; Schwab NY Municipal Money Fund - Investor Shares (SWYXX) has no minimum initial investment and an expense ratio of 0.35%; and, Variable Share Price Money Fund - Ultra Shares (SVUXX) now has a minimum initial investment of $1 million and an expense ratio of 0.19%.
The update features a few "Frequently asked questions," including: "Do any of these changes affect how Schwab Money Funds are managed?" Schwab answers, "Our day to day money fund portfolio management activities and investment philosophies have not changed. The focus continues to be stability of capital, liquidity and income."
The second question is: "Why are the minimums and net expense ratios changing?" They tell us, "In order to provide more Schwab clients with access to a broad range of taxable and tax-exempt purchased money funds that offer a convenient way to access potentially higher yields on cash."
Finally, the Q&A asks, "Where can I find latest yields?" It answers, "Latest yields and additional fund information such as fund profiles, portfolio holdings, and regulatory documents can be found at www.schwabfunds.com. To research a specific fund, enter the symbol into the search box or use the product finder tool."
In other news, Federated Investors has begun liquidating a number of its Municipal money market funds. A Prospectus Supplement filing for Money Market Obligations Trust and Federated Municipal Trust, Federated Connecticut, Florida, Michigan, Minnesota, New Jersey, North Carolina, and Ohio Municipal Cash Trusts says, "On July 31, 2017, the Board of Trustees (the "Board") of Money Market Obligations Trust approved a Plan of Liquidation for above named funds (the "Funds") pursuant to which the Funds will be liquidated on or about October 27, 2017 (the "Liquidation" or the "Liquidation Date"). In approving the Liquidation, the Board determined that the liquidations of the Funds is in the best interests of each of the Funds and their respective shareholders."
It explains, "Accordingly, the Adviser will begin positioning the portfolios of the Funds for liquidation, which may cause the Funds to deviate from their stated investment objectives and strategies. It is anticipated that each Fund's portfolio will be positioned into cash on or some time prior to the Liquidation Date. Effective as of the close of business on September 29, 2017, the Funds will be closed to new investors and closed to investments by existing shareholders on October 18, 2017."
It adds, "Any shares outstanding at the close of business on the Liquidation Date will be automatically redeemed.... Shareholders of each Fund, with the exception of Federated Municipal Trust, may also exchange their shares of the Funds for shares of any Federated fund or share class that does not have a stated sales charge or contingent deferred sales charge.... Shareholders of Federated Municipal Trust may exchange their shares for shares of Federated Capital Reserves Fund or Federated Government Reserves Fund, if the shareholder meets the relevant eligibility criteria and investment minimums." (See too our August MFI article, "Managers Flee from State Tax Exempt Money Funds.")
