We haven't written much about money fund liquidations and consolidations this year, and haven't featured an article in our Money Fund Intelligence newsletter since March 2021 ("Liquidations, Changes Slowly Reshape Manager Landscape"). But we just learned of another small fund family preparing to liquidate. A filing for Delaware Ivy Cash Management Fund tells us, "[O]n September 13, 2021, the Boards of Trustees of the Ivy Funds ... unanimously voted and approved a proposal to liquidate and dissolve [the] Delaware Ivy Cash Management Fund, Delaware Ivy VIP Government Money Market [and a number of other Delaware Ivy funds]. The liquidations and dissolutions are expected to take effect on or about November 15, 2021. Retirement accounts, as applicable, within these Funds will be liquidated on or about the Effective Date.... For Fund accounts with automated purchases, exchanges, and/or withdrawals established, these transactions will cease prior to liquidation if no action is taken."
The filing continues, "As noted in the supplement dated September 14, 2021, the Funds will be closed to new investors and all sales efforts will cease as of September 30, 2021. However, the Funds will continue to accept purchases from existing shareholders (including reinvested dividends or capital gains) until five (5) business days before the Liquidation Date." Delaware Ivy is the 54th largest manager of money market funds (out of 64) with just $652 million.
It tells us, "Until the liquidation of the Funds, shareholders of the Funds will have the opportunity to exchange their shares for shares of the same class of any other legacy Ivy Fund. Any exchange would be made at the current net asset values of a Fund and the selected legacy Ivy Fund. A Fund's shareholders would not incur front-end or contingent deferred sales charges upon these exchanges, as applicable. Additionally, no applicable contingent deferred sales charge will be assessed in connection with any redemption of your shares from a Fund prior to the Liquidation Date. Exchanges are not available with legacy Delaware Funds at this time."
A separate SEC filing explains, "Macquarie Asset Management is committed to continually enhancing its business in ways that are in the best interest of fund shareholders, clients, and funds. With this in mind, as part of our integration efforts relating to the Waddell & Reed Financial, Inc. acquisition, we have completed a thoughtful review of the combined investment resources from Ivy Investments and Macquarie Asset Management and made the decision to integrate our investment platform by making a number of changes to the portfolio management of certain legacy Ivy Funds. The changes, which will be effective on or about November 15, 2021, include a range of actions, including changes to who manages a fund, benchmark changes and, in some cases, investment strategy modifications and liquidations."
It adds, "As a shareholder, you will receive a prospectus supplement with this letter. We believe both fund shareholders and Macquarie will benefit from access to a more diversified product lineup with the strength of Macquarie's global platform. Importantly, there are no changes to the structure of our firm or the way we manage money for clients. We believe the addition of new capabilities and investment teams will result in a compelling combined platform and an enhanced client experience for our shareholders."
For more on liquidations, see these CD News pieces: "AIG Govt MMF, MuniFund Liquidate (8/3/21), "Western Files to Liquidate Tiny MMFs (6/7/21), "BlackRock Liquidates Ready Assets (2/11/21), "Delaware Liquidates Govt Cash Mgmt" (1/11/21); "DWS Liquidating Govt CR (BIRXX)" (11/25/20); "BMO Liquidating Inst Prime MMF" (11/17/20); "Morgan Stanley NY Muni MM Gone" (10/5/20); "SEC's Blass on Push for More MMF Reforms; Vanguard Liquidating PA, NJ" (9/28/20) and "Franklin, Legg Mason Deal Signals More Consolidation; More Liquidations (2/20/20).
In other news, Treasury Today wrote recently on "MMF industry pushes back against post-Covid reforms," which reviews a recent webinar from the OMFIF. They comment, "Money market funds (MMFs) should not be penalised by policymakers as a response to the market shock in March 2020, and efforts to 'fix' the industry could end up doing more harm than good. That is the view presented in an Official Monetary and Financial Institutions Forum (OMFIF) report and in a webinar that was hosted last week. In 'The future of money market funds' OMFIF states that proposals, such as capital buffers for MMFs, could be tackling problems that don't exist and the danger is that investors could seek systemically-riskier alternatives."
The piece explains, "On the question of whether MMFs should be regulated in a bank-like way with capital requirements, Hester Peirce, Commissioner, Securities and Exchange Commission (SEC) -- who was speaking in a personal capacity -- said in the webinar, 'I don't understand why we would need capital buffers in funds that are 100% capitalised.... I'm looking at it as a securities regulator and these are funds, which means that shareholder equity is on the line -- they're not banks where you have depositors who are creditors."
Treasury Today writes, "Peirce also noted how the events of March 2020, when pandemic panic gripped the financial markets, was an opportunity to test whether reforms that were introduced in the wake of the global financial crisis had the desired effect. 'I was someone who was a proponent of fees and gates and thought that was a good mechanism to put in place after 2008,' she said."
They tell us, "David Marsh, Chairman of OMFIF, who moderated the webinar, commented on how it is still debated whether MMFs are to be blamed for causing, or adding to, upsets in the market or whether they have been the victim of them.... MMFs seem to get blamed when they are not actually the culprit, Marsh noted."
Finally, the article adds, "Deborah Cunningham, Executive Vice President, Federated Hermes, commented on how the views of regulators and industry participants are converging: 'I do think progress has been made on the understanding of what happened in March 2020.' This is contrasted with the events of 2008, when MMFs were also under stress. The major difference, she noted, is that this time the crisis was beyond the control of the financial industry and was caused by a government shutdown that affected all sectors."
