This pointer came from a reader: the largest enhanced cash fund, Columbia Funds Strategic Cash, has halted redemptions, which had taken the fund down from $40 billion to $33 billion over several weeks. However, this report has not been confirmed by the fund manager, Columbia Management, nor has it been picked up by any of the major financial news outlets.
Note that this fund was not a retail fund and there is no indication that investors will lose money. However, Bank of America did set aside $300 million already in connection with this fund previously and it remains to be see whether this amount will be sufficient.
From Crane Data:
Columbia StratCash Halts Redemptions. Market rumors swirled Friday that the largest entrant in the “enhanced cash” space, Columbia’s Strategic Cash had halted redemptions. Enhanced cash pools, or “3c-7” funds, are private placements available to only the largest qualified institutional investors.
We’ve received no official word from Columbia yet, but multiple investors and sources tell Crane Data that redemptions have been frozen temporarily but may be made “in kind”, and that the pool is beginning the process of winding down or liquidating. Over half of the pool, $21 billion, has been separated into a “StratCash 2” portfolio, perhaps signaling a very large “in kind” separation. Assets of the now 2 pools have not declined precipitously, contrary to some rumors. StratCash has been gradually declined from $40 billion to $33 billion over the past several weeks. Columbia parent Bank of America reportedly set aside $300 million to support the pool previously.
As in Florida, we don’t believe any investors have suffered losses to date, and the fund’s NAVs have remained at $1.00 a share so far. StratCash becomes the latest enhanced cash product to retreat from the besieged sector. Federated returned investors’ money in full from its small entrant last month, taking a $4.9 million loss, and GE Asset Management liquidated its GE Enhanced Cash at $0.96 cents on the dollar.