The most recent issue of treasury and finance publication GTNews.com features an "Update on the Largest Money Fund Markets Worldwide" written by Crane Data President Peter G. Crane. Crane writes, "This article looks at the largest worldwide markets for money market mutual funds in the wake of last year's unprecedented market turmoil. It examines asset growth, recent market developments, and potential regulatory changes. While US money market mutual fund assets continue to reach record levels, a number of countries have seen substantial declines in assets."
The article features a table of the largest money fund markets worldwide, as well as a chart of the growth of worldwide money fund assets over the past five years. It explains, "Mutual fund trade groups, the Investment Company Institute and the International Investment Funds Association, recently released their latest quarterly 'Worldwide Mutual Fund Assets and Flows' survey. Although the numbers are slightly dated, they give the first glimpse of how money fund assets have been impacted by the Reserve Primary Fund's 'breaking the buck' last September. Crane Data LLC has analysed these third quarter 2008 statistics and produced a ranking of countries based on total money market mutual fund (MMF) assets."
The GTNews piece says, "Although worldwide assets dipped US$146bn, or 2.6%, in the latest quarter, global money fund totals remain dramatically higher than they were a year ago. Assets of all money market mutual funds rose by US$780bn, or 16.7%, to US$5.45 trillion over the past year. Worldwide totals have increased by US$1.58 trillion since the end of 2006 and by US$2.12 trillion since the end of 2004. So although money fund assets have experienced setbacks recently, it appears that their long-term growth trend remains intact.
Crane writes, "While asset growth has been robust in the US, MMFs have been confronted by an unprecedented series of challenges, from ultra-low yields to possible widespread regulatory changes.... Some are proposing dramatic changes to the MMF model. But the strict quality, maturity, and diversity guidelines of the US Securities and Exchange Commission's Rule 2a-7 have proven themselves to be popular, flexible and robust. The losses shouldered by US MMF advisors, which could end up in the billions, are still dwarfed by the losses taken by almost any single large bank over the past year. So we expect modest change in regulations, and even believe market events will hasten the adoption of the US model in Europe and elsewhere."
He continues, "Dublin-domiciled funds suffered due several factors. First, many fund families lacked more conservative government and treasury fund offerings.... Government funds caught much of the institutional money temporarily fleeing 'prime' or general purpose money funds. Irish funds don't have a diversified retail customer base either. Also, unlike US money funds, Irish funds lacked the extensive safety net of US government support programmes."
Visit http://www.gtnews.com for the full article and e-mail info@cranedata.us for a trial subscription to our new Money Fund Intelligence International product.
