Moody's assigned a AAA/MR1+ (money fund) to the new HSBC Canadian Dollar Liquidity Fund, "reflecting the high credit quality and underlying liquidity of the portfolio, together with the disciplined investment process and, effective risk management structure of the investment adviser, HSBC Global Asset Management (USA) Inc." The new sub-fund of HSBC Global Liquidity Funds PLC launched yesterday, becoming the sixth AAA rated Canadian money market mutual fund.
Moody's says, "The objective of the fund is to provide security of capital and liquidity together with an investment return which is comparable to normal Canadian Dollar denominated money market interest rates. The fund will aim to achieve its investment objective by investing in a diversified portfolio of high quality money market instruments denominated in Canadian dollars. These will include certificates of deposit, commercial paper, medium term notes, floating rate notes, banker acceptances, government bonds, treasury bills, Eurobonds, asset backed securities and corporate bonds." It adds, "During the investment ramp-up stage, Moody's expects the fund will have a larger percentage of assets in short-term cash while the manager becomes more acquainted with the cash flow patterns of its fund's institutional shareholders."
Other "offshore" money funds rated AAA-MR1+ by Moody's include: the Dublin-domiciled Daiwa Gaika MMF - Canadian $ Portfolio and Fidelity Inst. Cash Fund Plc - Canadian Dollar, and the Luxembourg-domiciled Nomura Multi Currency MMF - Canadian $ MMF. S&P rates the Bermuda-domiciled `Butterfield Money Market Fund Limited - Canadian Dollar Class AAA. (S&P also shows a AAA rating for the new HSBC fund, though a release has yet to be issued.) In addition, Moody's rated the only domesticly-available Canadian AAA money fund, AIM Trimark Canadian Dollar Cash Mgt Fund.
Crane Data wrote in its March 2008 Money Fund Intelligence, "AIM, Fidelity, Legg Mason and UBS are some of the major U.S. money fund names that offer Canadian money market funds, either domestically or via "offshore" funds. Other big fund names in Canada include: RBC, TD, CIBC, BMO, Franklin, Dynamic, and AGF. The Canadian money fund market totals just $60 billion, according to the Investment Funds Institute of Canada (IFIC). It is almost entirely retail in nature, as institutions have yet to warm to pooled products. But multinationals are inquiring, and those on the ground expect institutional money funds to materialize and prosper in coming months."
