Columbia Management recently posted a notice on its website entitled, "Money Market Update: Columbia Money Market Reserves and Columbia Cash Reserves Update," which appears to indicate that some of the last of its troubled structured investment vehicle-related and supported securities have been removed from the $34 billion Columbia Cash Reserves and the $14.5 billion Columbia Money Market Reserves. While there has been no official word yet about the fate of the 10th largest manager of money market mutual funds, rumors continue to circulate about a pending sale of the $110 billion (money fund) unit.
The statement says, "As of September 8, 2009, the following securities are no longer holdings in Columbia Money Market Reserves and Columbia Cash Reserves. These securities were purchased from the funds by an affiliate of Bank of America at prices equal to the amortized cost value, plus accrued interest, if any. Both Columbia Money Market Reserves and Columbia Cash Reserves are well positioned to focus on their investment objective of current income consistent with capital preservation and maintenance of a high degree of liquidity. Columbia Management's money market mutual funds have always transacted at $1.00 per share and continue to do so. In addition, Columbia Cash Reserves continues to benefit from a capital support agreement provided by an affiliate of Bank of America."
The statement says Columbia Cash Reserves removed Axon Financial Funding LLC, Issuer Entity (formerly, Ottimo), Wickersham Issuer Entity (formerly, Thornburg), and Victoria Finance, while Columbia Money Market Reserves removed Axon Financial Funding LLC. Columbia Cash Reserves' holdings as of 9/9/2009 may be seen here, while Columbia Money Market Reserves' holdings as of 9/9/2009 may be seen here. (See the SEC's website for the company's previous "no-action" letters.)
The company also recently issued a press release "Columbia Management to Curtail Securities Lending," which says, "Columbia Management Advisors, LLC, investment advisor to the Columbia Funds, today announced that the Columbia Funds will stop lending their equity and corporate debt securities in light of recent market volatility. Securities lending is generally employed to generate incremental revenue from the funds' holdings."
Colin Moore, chief investment officer, says, "Columbia Management believes that it is in the best interests of the Columbia Funds' shareholders not to lend out certain securities given the downward pressure that some borrowers of the securities are placing on the market. We believe under more stable market conditions that the income received from securities lending is a benefit to the Columbia Funds' shareholders. Given the current market environment, however, we believe that this practice has the potential to be more detrimental than helpful."
Finally, see our recent People News, "Peacher Leaves Columbia for Sun Life", which says, "Investment News reports that Sun Life Financial Inc. has hired Stephen C. Peacher as chief investment officer. Peacher was previously managing director at Columbia Management, overseeing liquidity strategies and fixed income."
