MutualFundWire.com: A Natixis Subsidiary Buys a Money Fund, But Why?
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Wednesday, October 24, 2012

A Natixis Subsidiary Buys a Money Fund, But Why?


Natixis has made another buy.

Reich & Tang [profile], a wholly owned subsidiary of Natixis Global Asset Management, has acquired the Value Line U.S. Government Money Market Fund, according to a company press release.

The transaction was completed on October 19, 2012. The fund was merged with Reich & Tang's Daily Income Fund - U.S. Government Portfolio.

Frank Bonanno, vice president and director of marketing for Reich & Tang, told MFWire that "We are always looking for ways to diversify our client base, and if we can do that by way of acquisitions, then so be it."

He added that the acquisition "gives Value Line folks the opportunity to do right by their shareholders by providing a lower expense ratio and giving them access to a larger fund."

According to Morningstar, the Value Line fund had $64 million of assets under management. The Reich & Tang fund that absorbed the Value Line fund has roughly $1.4 billion in assets under management.

Bonanno said that the deal also allows Value Line to focus on its core business, which is traditional open-end mutual funds. Reich & Tang, meanwhile, has been in the money fund business since its founding in 1974, and manages five money funds.

"We are money fund and liquidity specialists -- that is all we do," Bonnano said. "This is our core competency. If there are opportunities to acquire funds form other companies, then we will entertain those opportunities."

Value Line, a publicly-traded company, has experienced market volatility since the financial crisis of 2008. Its stock price, ticker symbol VALU, has fallen from $45.90 per share in March 2008 to under $10.

Last week, Natixis purchased the $13.5 billion asset manager McDonnell Investment Management.

Reich & Tang is headed by chief executive Michael Lydon, and promoted Tom Nelson to serve as its chief investment officer in June.



Company Press Release

Reich & Tang Acquires Value Line U.S. Government Money Market Fund



October 24, 2012, New York, NY—Reich & Tang, the third longest running money market mutual fund complex in the world, today announced that it has acquired the Value Line U.S. Government Money Market Fund. The transaction was completed on October 19, 2012.

Reich & Tang, a subsidiary of Natixis Global Asset Management S.A., has been providing money market funds and liquidity solutions for nearly four decades and has built a reputation as a conservative investment manager within its peer group. “We are pleased to have completed a deal with Value Line that accomplishes its primary goal of adding shareholder value,” said Michael Lydon, Chief Executive Officer of Reich & Tang. “The deal also underscores Reich & Tang’s commitment to growing its money fund business and diversifying its shareholder base.”

The market environment for money funds over the past few years has prompted many investment managers to reconsider their money market fund offerings to focus on the growth and distribution of their core investment products. The ancillary benefit of managing money market funds in addition to core fund offerings has significantly diminished over the past couple of years. 

“By adding the Reich & Tang Daily Income Fund U.S. Government Portfolio to our suite of products, our retail shareholders benefit by investing in a larger pool of assets with a lower gross expense ratio,” said Mitchell Appel, President of Value Line Funds. “As a result, the Value Line Funds’ investment adviser can focus more resources on managing our equity and hybrid funds, many of which are rated 4 and 5 stars overall by Morningstar and are leaders in their categories.”

Reich & Tang remains one of the largest companies in the nation dedicated solely to money funds, and deposit and liquidity solutions. “Our singular focus provides shareholders with access to the money fund management expertise of Reich & Tang while preserving the brand integrity of Value Line, which is an ideal solution that extends the promise of providing shareholders with more choice and flexibility with their cash investments,” concluded Lydon.


Printed from: MFWire.com/story.asp?s=41781

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