Two state-specific municipal bond portfolios managed by BlackRock Inc. were slated to be closed to investors effective Wednesday, a day after the firm began liquidating the funds' investments, according to a Feb. 18 addendum to the funds' prospectuses.
The $125.6 million BlackRock Ohio Municipal Bond Portfolio and the $76.2 million BlackRock Kentucky Municipal Bond Portfolio, both managed by Walter O'Connor and Phillip Soccio, will "no longer accept orders to purchase fund shares from new investors or existing shareholders" as of 4 p.m. EST Wednesday, according to details in the addendum.
The decision by the firm's board of trustees to close the funds was approved on Feb. 9 and, according to the firm, is unrelated to the recent spate of historic outflows from muni bond funds. Between November and the end of January weekly industry outflows surged, skyrocketing to an unprecedented $4 billion in the week ended Jan. 19, according to Lipper FMI.
"As part of BlackRock's ongoing evaluation of its complete mutual funds lineup, the decision was made to liquidate these funds for non-related reasons," according to a company spokesperson.
During the liquidation period, the funds may continue to invest the proceeds from sales of their assets in municipal securities, including both general obligation and revenue bonds, and they may also invest in variable-rate demand securities.
Under the terms, the funds also expect to invest at least 50% of the value of their total assets in securities exempt from federal income tax until June 30.
Prior to that, the funds may hold the remaining 50% of their total assets in cash or may invest the assets in the BlackRock Money Market Portfolio, a series of BlackRock Funds.
"On or about July 14, 2011, all of the assets of the fund will be liquidated, each investor's shares will be redeemed at net asset value per share, and the fund will then be terminated," each fund's addendum stated.
The Ohio portfolio, which debuted on Dec. 1, 1992, had a net asset value of $9.89 as of Feb. 22 and a 12-month yield of 4.50%, according to details about the fund's A shares on its website. As of Jan. 31, it posted a one-year average annual total return of minus 1.02% , a three-year average annual total return of 2.13%, and 2.76% and 3.64% for five and 10-years, respectively, as of Jan. 31.
It also posted a 52-week low of $9.56 as of Jan. 18, and a 52-week high of $10.69, as of Aug. 31, 2010.
The Kentucky portfolio, meanwhile, debuted on May 11, 1998. With a net asset value of $8.77, as of Feb. 22 and a 12-month yield of 4.55%, the fund's A shares posted a 52-week low of $8.56 as of Jan. 18, and a 52-week high of $9.51 as of Aug. 31, 2010.
In addition, it posted a one-year average annual total return of minus 0.86%, a three-year average annual total return of 2.12%, followed by 2.51% and 3.15% in five and 10 years, respectively, as of Jan. 31.
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