The Investment Company Institute released its latest "Worldwide Mutual Fund Assets and Flows" data collection recently. The latest report shows that total global money fund assets inched lower by $9 billion, or 0.2%, to $5.063 trillion in Q1 2016. China, Ireland, and Luxembourg suffered the biggest declines, while France, Korea, Brazil, and the U.S. saw gains. Worldwide MMF assets have increased by $515.0 billion, or 11.3%, over the previous 12 months through 3/31/16. We review the latest Worldwide MMF totals below, and we also discuss Crane Data's latest MFI International statistics and recent comments from our Money Fund Symposium conference below.
The release says, "Worldwide regulated open-end fund assets increased 1.7 percent to $38.59 trillion at the end of the first quarter of 2016, excluding funds of funds. Worldwide net cash inflow to all funds was $139 billion in the first quarter, compared with $579 billion of net inflows in the fourth quarter of 2015. The Investment Company Institute compiles worldwide open-end fund statistics on behalf of the International Investment Funds Association, the organization of national fund associations. The collection for the first quarter of 2016 contains statistics from 46 countries."
It continues, "Bond fund assets increased by 4.7 percent to $8.49 trillion in the first quarter. Balanced/mixed fund assets increased by 1.7 percent to $5.26 trillion in the first quarter, while money market fund assets decreased by 0.2 percent globally to $5.06 trillion.... Money market funds worldwide experienced an outflow of $42 billion in the first quarter of 2016 after registering an inflow of $236 billion in the fourth quarter of 2015.... Money market fund assets represented 14 percent of the worldwide total."
According to Crane Data's analysis of ICI's "Worldwide" fund data, the U.S. maintained its position as the largest money fund market in Q1'16 with $2.759 trillion (or 51.3% of all global MMF assets). U.S. MMF assets increased by $4.1 billion in Q1'16 and by $113.5B in the 12 months through March 31, 2016. China remained in second place among countries overall despite a drop in assets. China saw assets fall $40.4 billion (down 5.9%) in Q1 to $644.0 billion (12.0% of worldwide assets), its first decline since late 2010. However, over the last 12 months through March 31, 2016, Chinese MMF assets have grown an astounding $294.8 billion, or 84.4%.
A July 1 article in the Financial Times, entitled, "China's fund industry almost doubles in 2015," explains, "China's fund industry almost doubled in size in 2015 as a series of interest rate cuts spurred rapid growth of money market funds.... Overall, assets under management in China's fund industry rose by 87 percent in 2015 to more than Rmb8tn ($1.2tn), by far the most rapid pace of expansion on record.... The surge was driven primarily by a 109 percent rise in the assets of money market funds to $684bn. China now boasts the second-largest money market fund sector in the world, after the US but now ahead of Ireland, with 14 percent of assets under management."
Ireland remained third among these country rankings, ending Q1 with $494.2 billion (9.2% of worldwide assets). Dublin-based MMFs were down $14.7B for the quarter, or 2.9%, but up $112.0B, or 29.0%, over the last 12 months. France remained in fourth place with $374.8 billion (7.0% of worldwide assets). Assets here jumped $36.3 billion, or 10.7%, in Q1, and were up $46.1 billion, or 14.0%, over one year. ICI's data no longer includes money fund figures for Australia, but they would rank as the fifth largest market at $322 billion, their level of two years ago. (Australia's MMF assets were shifted into the "Other" category several quarters ago, but we continue to list them in our version of the tables.)
Luxembourg was in sixth place with $310.9B, or 5.8% of the total, down $11.5 billion in Q1 (-3.6%) and up $12.6B (4.2%) for 1 year. Korea, the 7th ranked country, saw MMF assets rise $11.0 billion, or 13.8%, to $91.1 billion (1.7% of total) in Q1 and fall $1.2 billion (4.9%) for the year. Brazil moved up to 8th place, increasing $10.2 billion, or 19.9%, to $61.5 billion (1.1% of total assets) in Q1. It increased $20.0 billion (48.0%) over the previous 12 months. ICI's statistics show Mexico in 9th place with $55.8B, or 1.0% of total, up $2.1B (3.9%) in Q1 and down $3.1B (5.3%) for the year. India was in 10th place, dropping $5.1 billion, or 14.5%, to $30.1 billion (0.6% of total assets) in Q1 and increasing $4.1 billion (15.7%) over the previous 12 months.
Taiwan ($29.3B, down $1.4B for the quarter and up $4.1B for the year), Sweden ($23.5B, up $2.4B for the quarter and up $5.1B for the year), Switzerland ($19.4B, up $98M and up $233M), Canada ($19.3B, up $1.1B and up $76M), and Belgium ($18.8B, up $471M and up $17.0 billion for the year) ranked 11th through 15th, respectively. South Africa, Chile, Japan, Germany, and Spain round out the 20 largest countries with money market mutual funds. Canada moved ahead of Belgium, and South Africa moved ahead of Chile in the latest rankings.
Note that 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. Contact us if you'd like our latest "Largest Money Market Funds Markets Worldwide" spreadsheet, based on ICI's data, or if you'd like to see our MFI International product.
Crane Data's Money Fund Intelligence International shows assets in "offshore" money market mutual funds, U.S.-style funds domiciled in Dublin or Luxemburg and denominated in USD, Euro and GBP (sterling), up $35.2 billion year-to-date to $734.3 billion as of 6/30/16. U.S. Dollar (USD) funds (156) tracked by MFII account for over half ($390.3 billion, or 53.2%) of the total, while Euro (EUR) money funds (98) total E84.9 billion and Pound Sterling (GBP) funds (108) total L172.3. USD funds are down $1.8 billion, or 0.5%, YTD, while Euro funds are up E9.5 billion, or 12.6%, and GBP funds are up L21.9 billion, or 14.9%.
Offshore USD MMFs have an average 7-Day Net Yield of 0.32% as of June 30, up 16 basis points YTD. The average 7-Day Net Yield of EUR MMFs is -0.39%, down 21 basis points YTD, while the GBP MMF yields are averaging 0.41%, up 7 basis points on the year. Crane Data tracks 156 USD MMFs, 98 Euro MMFs and 108 Sterling MMFs.
Our recent Crane's Money Fund Symposium conference included the session, "MMF Issues in Europe and Asia," which featured Jonathan Curry of HSBC Global A.M. and Dennis Gepp of Federated UK, who also is a Director at IMMFA. European money market reforms were a big topic in the presentation (which occurred prior to the Brexit votes results being known). Gepp provided some insight into the next steps going forward. He said, "Over the next 6 months there will be trilogue meetings, possibly one as early as the first couple of weeks of July. If we do manage to have an initial meeting in the middle of July, it will be very much a preamble -- the serious work will be done in September onwards."
He expects the three parties -- the Council of Ministers, European Parliament, and European Commission, will come to a final agreement by the end of the year. "Let's assume we can end the year with an agreed position -- it's not quite as easy as that." It likely won't be posted in the official journal until the second quarter of 2017 and 20 days after that the implementation period will start. Regarding the length of the implementation period, "the European Commission suggested it could only take 6 months; Parliament said that's too short, it has to be 9 months. Eventually, the European Council said it's got to be at least 2 years. So we are hoping for a two year implementation period."
On client concerns about reforms, HSBC's Curry added, "One of the things that clients are interested in is understanding the LVNAV -- How is that going to operate? What is the risk profile is? What are the nuances around pricing?" Also, fund ratings, "Our expectation is that through the trilogue process, fund ratings will still be allowed in Europe." He added, "One of the areas that all three broadly tend to agree is on the question about sponsor support. They're in agreement that they don't believe sponsor support should be allowed in European money market funds."
Finally, on negative yields in Euro funds, Curry said, "There has been some reduction in AUM in since negative yields came in. But I look at those numbers and I think that's actually not a bad result. I think there was more concern going into this that the reaction of investors would be more significant than it has been. The way some of us are looking at this is, the utility value of money funds hasn't changed -- it's still exactly the same utility value, the difference is the yields are negative. They are making the same relative value decisions that they are making when yields are positive -- weighing the options -- making decisions the same way they do when yields are positive."
