Even as it prepares to repay investors in the Reserve Primary Fund, the largest and most prominent money market fund that “broke the buck” more than a year ago, the Reserve Management Co. has taken another step toward making investors in one of its other funds whole.
Reserve Management said Monday it will “as soon as practicable” return $43 million to investors in its Reserve Yield Plus Fund, the fourth distribution it has made so far to investors who suffered losses last year.
That amount represents about half of the Yield Plus's current assets of $85.5 million, including the now-worthless share of Lehman Brothers Holdings securities in the fund, Reserve Management said. When the money is returned, some $1.09 billion — or more than 94% of the fund's assets at the close of business on Sept. 15, 2008 when the fund broke the buck — will have been returned to investors, according to the Reserve.
The Reserve said it would announce the date of the distribution in January, after it makes sure that it can comply with U.S. District Court-mandated timing for paying back investors in the Reserve Primary Fund. That fund had been as large as $64 billion at the time of the Lehman Brothers bankruptcy, but it now has about $3.5 billion in assets.
The Securities and Exchange Commission said last month that investors in the Primary Fund are likely to receive 99 cents on the dollar.
Regardless of the uncertainty of the timing — and the slowness of process overall — every announcement like yesterday's is a step in the right direction, said Peter Crane, president and chief executive of Crane Data, LLC.
“Every penny counts,” Mr. Crane said. “The Reserve Yield Plus Fund has been a thorn in [The Reserve's] side, too. Putting this episode behind them is going to help repair the reputation of The Reserve, money funds, ultra short bond funds and asset managers in general.”