RBC Global Asset Management announces planned changes to U.S. money market funds

Nov 30, 2015, 09:00 ET from RBC

MINNEAPOLIS, Nov. 30, 2015 /PRNewswire/ - RBC Global Asset Management-US (RBC GAM-US) announced today actions of the RBC Funds Trust Board of Trustees regarding changes to its money market funds in response to amendments to regulations governing money market mutual funds.

"RBC Global Asset Management has a long history of offering liquidity and fixed income strategies as part of our investment platform. With money market reform on the horizon, many investors are rethinking their approach to cash management and looking for alternative solutions," said Mike Lee, Chief Executive Officer and Chief Investment Officer of RBC GAM-US. "Following close consultation and discussion with our clients, we feel that our lineup of cash management options is well positioned to serve the long term interests of investors as they navigate these changes."

RBC Money Market Funds

The U.S. Government Money Market Fund will continue to be offered to all investors. The fund currently invests 99.5% or more of its assets in U.S. Government securities or repurchase agreements and plans to continue to operate in accordance with money market reform amendments, including seeking to maintain a stable $1.00 net asset value per share (NAV).

The Board of Trustees also stated its intention to not currently implement liquidity fees or redemption gates for the U.S. Government Money Market Fund.

The Prime Money Market Fund will no longer be offered to institutional or retail investors after September 30, 2016 and will be closed to new investments at a date to be determined, pending final Board approval and appropriate notice to shareholders. Shareholders invested in the fund will be notified of their options, including eligibility to exchange shares of the Prime Money Market Fund for shares of the U.S. Government Money Market Fund.

Money Market Reform

Under the amendments to Rule 2a-7, effective October 14, 2016, institutional prime and municipal money market funds are required to price and transact shares of such funds at a floating NAV. Retail and U.S. government money market funds may continue to seek a stable $1.00 NAV.

In addition, both prime and municipal money market funds may be subject to liquidity fees and redemption gates in the event weekly liquid assets fall below a designated threshold.

"This is an opportune time for investors to review their cash management strategies as they look to maintain liquidity and flexibility in their investment portfolio," said John C. Donohue, Managing Director and Head of Liquidity Management, RBC GAM-US. "Government money market funds address that need by seeking to offer safety, liquidity and a competitive yield."

In addition to several cash management options, including the U.S. Government Money Market Fund, RBC GAM-US also offers short term fixed income products such as the RBC Short Duration Fixed Income Fund and RBC Ultra Short Fixed Income Fund, which can serve to assist our shareholders who have shorter investment horizons.

RBC Global Asset Management has over $28 billion in global institutional cash management assets, including over $19 billion in the U.S., as of September 30, 2015.

For further information about the U.S. Government Money Market Fund, please visit https://us.rbcgam.com/mutual-funds/money-market-funds/fg-7/fsg-5/fid-11/individual/overview/us-government-money-market-fund.fs.

About RBC Global Asset Management

RBC Global Asset Management (RBC GAM) is the asset management division of Royal Bank of Canada (RBC), and includes institutional money managers BlueBay Asset Management and Phillips, Hager & North Investment Management. RBC GAM is a provider of global investment management services and solutions to individual, high-net-worth and institutional investors through mutual funds, exchange-traded funds, hedge funds, pooled funds, separate accounts and specialty investment strategies. RBC GAM group of companies manage more than $280 billion USD in assets and have approximately 1,300 employees located across Canada, the United States, Europe and Asia.

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An investment in money market funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. Although these funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these funds.

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Mutual fund investing involves risk. Principal loss is possible. Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. Investments in lower-rated and non-rated securities presents a greater risk of loss to principal and interest than higher-rated securities. Investments in foreign securities involve greater volatility and political, economic and currency risks and differences in accounting methods. These risks are greater for emerging markets. Derivatives such as futures, forwards, and swaps involve risks different from, and in certain cases, greater than the risks presented by more traditional investments. Investments in Mortgage related securities including pass-through securities and Collateralized Mortgage Obligation include additional risks that investors should be aware of including credit risk, prepayment risk, possible illiquidity and default, as well as increased susceptibility to adverse economic developments. The Fund's risks are more fully described in the prospectus. The RBC Funds are distributed by Quasar Distributors, LLC.