MutualFundWire.com: A CEF Will Merge Into a $1.8B-AUM Muni Bond Fund

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Tuesday, June 3, 2025

A CEF Will Merge Into a $1.8B-AUM Muni Bond Fund

The folks at a money center bank's $2-trillion-AUM asset management arm are preparing to merge a muni bond closed-end fund into an open-end one. Both funds are more than three decades old.

Yesterday (June 2), the team at BNY Mellon Investment Adviser, Inc. (BNYIA, part of BNY's BNY Investments [profile]) revealed that the shareholders of BNY Mellon Municipal Income, Inc. (DMF on the NYSE) have approved a plan to reorganization DMF into the BNY Mellon AMT-Free Municipal Bond Fund. New York City-based BNYIA serves as investment advisor to both funds and as administrator of the acquiring fund, while BNY's Insight North America LLC (INA) serves as subadvisor to both funds.

DMF's inception date was October 21, 1988 (making the fund more than 36 years old), and it now has about $149 million in AUM.* The acquiring fund's inception date was May 6, 1994 (making the fund more than 31 years old), and it now has about $1.774 billion in AUM.**

Friday (June 6) is planned termination date for DMF's dividend reinvestment plan (DRP). June 18 is DMF's planned delisting date from the exchange. And June 20 is the planned reorganization date. This all comes after DMF's shareholders officially asked the board (via a non-binding proposal) in June 2024 to look into ways to monetize DMF's shares at or close to NAV (CEFs generally trade at a discount to NAV); in March 2025, the board approved the reorg plan, and now the shareholders have done so, too.

The planned fund merger appears to offer DMF's shareholders a reduction in ongoing fees. DMF's net expenses total 329 basis points. Meanwhile, the acquiring fund comes in five flavors:

A shares (DMUAX), with a maximum upfront load of 450bps and an expense ratio of 68bps;

C shares (DMUCX), with a maximum deferred load of 100bps and an expense ratio of 145bps;

I shares (DMBIX), with an expense ratio of 43bps and no load;

Y shares (DMUYX), with an expense ratio of 41bps and no load; and

Z shares (DRMBX), with an expense ratio of 49bps and no load (though Z shares generally aren't available for new accounts).

The acquiring fund's Y shares require a $1-million minimum initial investment but have no minimum subsequent investment. The acquiring fund's other share classes require a $1,000 minimum initial investment and a $100 minimum subsequent investment.

DMF and its acquirer have partially overlapping PM teams from INA. DMF's PM team includes:

Jeffrey Burger, senior portfolio manager for tax sensitive strategies (a PM on the fund since November 2014); and

Daniel Rabasco, head of municipal bonds strategies (a PM on the fund since July 2016).

The acquiring fund's PM team includes:

Thomas Casey, senior PM for tax-sensitive strategies (a PM on the fund since July 2014); and

Rabasco (a PM on the fund since February 2012).

The two funds have different providers for another key role. Computershare Inc. serves as DMF's dividend disbursing agent, registrar, and transfer agent. Yet BNY Mellon Transfer, Inc. (a BNYIA subsidiary) serves as transfer agent and dividend disbursing agent for the acquiring fund.

BNY Mellon Securities Corporation (BNYMSC, another BNYIA subsidiary) serves as the acquiring fund's distributor. The fund is a series of BNY Mellon Municipal Funds, Inc..

Yet DMF and the acquiring fund also have several other providers in common, including:

the Bank of New York Mellon as custodian;

Ernst & Young LLP as independent accounting firm; and

Stradley Ronon Stevens & Young LLP as counsel.