Crane Data's MFI International shows assets in "offshore" money market mutual funds, U.S.-style funds domiciled in Ireland or Luxemburg and denominated in USD, Euro and GBP (sterling), up $100 billion year-to-date to $832 billion as of 12/15/17. U.S. Dollar (USD) funds (152) account for over half ($430 billion, or 51.7%) of the total, while Euro (EUR) money funds (93) total E95 billion and Pound Sterling (GBP) funds (106) total L218. USD funds are up $32 billion, YTD, while Euro funds are flat (up E0 billion) and GBP funds are up L28B. USD MMFs yield 1.09% (7-Day) on average (12/15/17), up 93 basis points from 12/31/16. EUR MMFs yield -0.50% on average, down 31 basis points YTD, while GBP MMFs yield 0.26%, down 2 bps YTD. We review the latest MFI International Portfolio Holdings and also quote from a recent article on China's Yu'e Bao, below.
Crane's latest MFI International Money Fund Portfolio Holdings, with data (as of 11/30/17), shows that European-domiciled US Dollar MMFs, on average, consist of 17% in Treasury securities, 25% in Commercial Paper (CP), 22% in Certificates of Deposit (CDs), 19% in Other securities (primarily Time Deposits), 14% in Repurchase Agreements (Repo), and 3% in Government Agency securities. USD funds have on average 30.3% of their portfolios maturing Overnight, 14.0% maturing in 2-7 Days, 24.1% maturing in 8-30 Days, 11.0% maturing in 31-60 Days, 8.3% maturing in 61-90 Days, 8.8% maturing in 91-180 Days, and 3.6% maturing beyond 181 Days. USD holdings are affiliated with the following countries: US (26.0%), France (15.9%), Japan (9.5%), Canada (9.0%), Sweden (6.1%), The Netherlands (5.7%), Australia (5.1%), Germany (5.0%), United Kingdom (4.3%), Singapore (3.4%), Belgium (2.4%), and China (2.4%).
The 20 Largest Issuers to "offshore" USD money funds include: the US Treasury with $83.9 billion (16.9% of total assets), BNP Paribas with $20.1B (4.1%), Societe Generale with $15.2B (3.1%), Credit Agricole with $13.3B (2.7%), Mitsubishi UFJ Financial Group Inc with $11.7B (2.4%), Toronto-Dominion Bank with $11.5B (2.3%), RBC with $11.1B (2.2%), Wells Fargo with $10.2B (2.1%), Mizuho Corporate Bank Ltd with $9.2B (1.9%), Credit Mutuel with $8.0B (1.6%), Svenska Handelsbanken with $7.8B (1.6%), Sumitomo Mitsui Banking Co with $7.8B (1.6%), Natixis with $7.7B (1.5%), Barclays PLC with $7.6B (1.5%), Swedbank AB with $7.5B (1.5%), Skandinaviska Enskilda Banken AB with $7.2B (1.5%), DnB NOR Bank ASA with $7.1B (1.4%), ING Bank with $7.0B (1.4%), Nordea Bank with $6.8B (1.4%), and National Australia Bank with $6.8B (1.4%).
Euro MMFs tracked by Crane Data contain, on average 42% in CP, 23% in CDs, 23% in Other (primarily Time Deposits), 10% in Repo, 1% in Treasuries and 1% in Agency securities. EUR funds have on average 23.9% of their portfolios maturing Overnight, 9.4% maturing in 2-7 Days, 13.1% maturing in 8-30 Days, 17.1% maturing in 31-60 Days, 18.1% maturing in 61-90 Days, 14.8% maturing in 91-180 Days and 3.6% maturing beyond 181 Days. EUR MMF holdings are affiliated with the following countries: France (30.3%), Japan (13.6%), US (11.0%), Sweden (7.7%), The Netherlands (7.4%), Belgium (6.6%), Switzerland (5.2%), Germany (4.8%), the United Kingdom (3.8%), and China (3.1%).
The 15 Largest Issuers to "offshore" EUR money funds include: BNP Paribas with E5.7B (5.8%), Credit Agricole with E4.1B (4.2%), Svenska Handelsbanken with E3.7B (3.8%), Nordea Bank with E3.5B (3.6%), Rabobank with E3.5B (3.5%), Credit Mutuel with E3.4B (3.4%), Societe Generale with E3.2B (3.3%), KBC Group NV with E3.0B (3.1%), Mizuho Corporate Bank Ltd with E3.0B (3.0%), UBS AG with E3.0B (3.0%), Sumitomo Mitsui Banking Co with E2.9B (3.0%), Agence Central de Organismes de Securite Sociale with E2.8B (2.8%), BPCE SA with E2.6B (2.7%), Mitsubishi UFJ Financial Group Inc with E2.6B (2.6%), and Dexia Group with E2.5B (2.5%).
The GBP funds tracked by MFI International contain, on average (as of 11/30/17): 41% in CDs, 24% in Other (Time Deposits), 20% in CP, 11% in Repo, 3% in Treasury, and 1% in Agency. Sterling funds have on average 27.0% of their portfolios maturing Overnight, 6.1% maturing in 2-7 Days, 9.5% maturing in 8-30 Days, 17.5% maturing in 31-60 Days, 19.8% maturing in 61-90 Days, 16.6% maturing in 91-180 Days, and 3.5% maturing beyond 181 Days. GBP MMF holdings are affiliated with the following countries: France (20.3%), Japan (18.2%), United Kingdom (14.4%), The Netherlands (7.2%), Germany (6.3%), Canada (5.7%), the US (5.2%), Sweden (4.8%), Australia (3.8%), and China (2.8%).
The 15 Largest Issuers to "offshore" GBP money funds include: UK Treasury with L10.3B (6.2%), Credit Agricole with L7.3B (4.4%), BPCE SA with L7.2B (4.3%), Mitsubishi UFJ Financial Group Inc. with L7.2B (4.3%), BNP Paribas with L6.5B (3.9%), Sumitomo Mitsui Banking Co. with L6.3B (3.8%), Sumitomo Mitsui Trust Bank with L6.2B (3.7%), Rabobank with L6.0B (3.6%), Mizuho Corporate Bank Ltd with L5.2B (3.1%), Credit Mutuel with L5.1B (3.1%), Bank of America with L5.1B (3.0%), DZ Bank AG with L4.7B (2.8%), Nordea Bank with L4.4B (2.6%), Toronto Dominion Bank with L4.3B (2.6%), and ING Bank with L3.5B (2.1%).
In other non-U.S. money fund news, the South China Morning Post writes "China's giant Yu'e Bao money market fund riskier than US rival, Fitch says." It explains, "Chinese money market fund Yu'e Bao, the world's largest with assets of some 1.56 trillion yuan (US$233 billion), has a weaker credit quality and liquidity than its closest competitor run by US bank JPMorgan, according to a report by ratings agency Fitch."
The article continues, "Yu'e Bao, which is managed by Tianhong Asset Management and distributed by Alibaba Group Holding's online payments affiliate Ant Financial, attracted much fanfare during its early years when it offered investors annualised returns of over 6 per cent, and has grown to represent a quarter of the entire money market fund sector in China. The fund was set up in part to manage the money transacted through Alibaba's e-commerce platforms, and its size dwarfs JPMorgan's US government fund, which has about US$140 billion of assets under management."
It explains, "But Fitch noted that 87 per cent of Yu'e Bao's underlying assets were negotiable time deposits with domestic Chinese banks, whereas the JPMorgan fund invested only in AAA-rated US Treasuries and government securities, or in repos backed by those bonds." The piece quotes Fitch analyst Huang Li, "The liquidity of Yu'e Bao is weaker than its US counterpart, because these banking deposit instruments are bilateral contracts and hence do not have a secondary market.... Also, Yu'e Bao's assets are longer dated, as the weighted average maturity of its assets is 60 days, compared with just 17 days for the JPMorgan money market fund."
Finally, the South China Morning Post adds, "However, Fitch also noted that Yu'e Bao's investor base is large and diversified, with 325 million investors, making large-scale redemptions an unlikely event. In contrast, the JPMorgan fund is predominately held by institutional investors, meaning its investor base is more concentrated.... Huang said recent new money market fund regulations introduced by China's securities regulator, which became effective in October, would be positive for the industry's development."
See also, The Wall Street Journal's "Tax Plan Strikes at Tech Giants' Foreign Profits," which says, "While most U.S. businesses would pay lower taxes under congressional Republicans' proposed tax overhaul, some of the world's richest technology companies might actually see their rates rise. A window into how Microsoft Corp. currently pays a disproportionately larger portion of its taxes overseas shows how the legislation could offset the benefits of returning cash home."
The piece comments, "Microsoft could bring cash home after the tax law is passed without much penalty beyond the initial one-time tax on accumulated foreign profits. The company keeps 95% of its cash, or $132 billion, outside of the U.S., a larger offshore cash pile than any company except Apple Inc., which holds 94% of its cash, or about $252 billion, overseas."
