In today's Crane Data News, we take a look at money market mutual funds outside the U.S.. We review the ICI's "Worldwide Mutual Fund Assets and Flows, First Quarter 2013", which was released recently. Crane Data excerpts and analyzes the money fund portion of the ICI's latest global statistics. We also quote from IMMFA Chairman Jonathan Curry, who presented a session entitled, "Survivor: Update on European Money Funds" at our recent Money Fund Symposium. Finally, we also review the agenda and plans for our upcoming European Money Fund Symposium, Crane Data's first conference event focusing on "offshore" money funds domiciled in Dublin or Luxembourg. European MFS is scheduled to take place Sept. 24-25, 2013, at the Conrad Hotel in Dublin, Ireland.
ICI's latest Worldwide release says, "Mutual fund assets worldwide increased 3.8 percent to $27.86 trillion at the end of the first quarter of 2013, an all-time high. Worldwide net cash flow to all funds was $339 billion in the first quarter, compared to $427 billion of net inflows in the fourth quarter of 2012.... Equity funds worldwide had net inflows of $144 billion in the first quarter.... Flows into bond funds totaled $189 billion in the first quarter, down from net inflows of $217 billion in the previous quarter. Outflows from money market funds were $109 billion in the first quarter of 2013, reversing most of the $137 billion inflow recorded in the fourth quarter of 2012."
The release continues, "The global outflow from money market funds in the first quarter was driven predominately by outflows of $95 billion in the Americas, while Europe registered outflows of less than $3 billion in the first quarter.... At the end of the first quarter of 2013, 41 percent of worldwide mutual fund assets were held in equity funds. The asset share of bond funds was 26 percent and the asset share of balanced/mixed funds was 12 percent. Money market fund assets represented 17 percent of the worldwide total."
According to Crane Data's analysis of ICI's data, the U.S. maintained its position as the largest money fund market in Q1'13 with $2.596 trillion (56.2% of all worldwide MMF assets), though assets declined by $98 billion in Q1'13 (they were up by $14B in the past year). France remained a distant No. 2 to the U.S. with $475 billion (10.0%, down $4 billion in Q1 and down $25B over 1 year), followed by Ireland ($363 billion, or 7.9% of total assets, down $16B in Q1 and down $28B over 12 months). Australia moved up to 4th place in the latest quarter with a gain of $10 billion in the quarter and $53B in the past year to $355B (7.2%), surpassing new No. 5, Luxembourg ($326B, 7.1% of the total, down $17B in Q1 and down $54B for 1 year).
Ireland and Luxembourg's totals are primarily "offshore" money funds marketed to global multinationals, while most of the other countries in the survey have primarily domestic money fund offerings. (Crane Data considers some, like France and Italy, with "accumulating" NAV instead of stable NAV funds, to be more like variable annuities than money market funds.) China ($84B, down $8B in Q1 and up $36 billion in 12 months), Korea ($68B, up $8B and $12B), Mexico ($58B, up $2B and down $5B), Brazil ($56B, up $11B and $10B), and Canada round out the 10 largest countries with money funds.
We mentioned in yesterday's "Link of the Day" that the Institutional Money Market Funds Association (IMMFA), which represents triple-A rated, constant NAV money funds similar to those found in the U.S., launched a new website. Chairman Jonathan Curry commented at our recent Symposium, "The need for strong money market funds is stronger than ever, that's true in Europe and in the U.S. The AUM of IMMFA funds has been pretty stable, which we take as a positive based on the headwinds that the industry faces ... low interest rates, [a limited] supply of assets and of course a fraught regulatory environment.... Suffice it to say that we need to waive fees in some currencies and in some products, based on the ultra-low yields."
He continues, "Indeed, in Euros, we face a more challenging environment in terms of ultra-low yields than the industry faces here today. The industry has made some changes to the products to address the risk of yields going into negative territory, which I think is a low probability of that happening here in the US.... The debate has been as fierce in Europe as it has been here, and I think despite the level of interaction and the level of lobbying that IMMFA and its members have done, we still see a lack of objectivity and arguably a lack of understanding from the European regulatory community around reform of money market forms. So the common misconceptions that we experience in Europe are similar to the ones that are experienced here."
Finally, Crane Data will be bringing its affordable and involved brand of conference events to Europe in September with the launch of European Money Fund Symposium, Sept. 24-25 in Dublin. European Money Fund Symposium features an unmatched speaking faculty, including many of the world's foremost authorities on money funds in Europe and worldwide, and an impressive inaugural list of sponsors. Visit http://www.euromfs.com to register and see the latest agenda, or contact us for more details.
