Fitch Ratings is the latest money fund watcher to weigh in on December money market mutual fund holdings. Their latest publication, entitled, "U.S. Money Fund Exposure and European Banks: Euro Zone Diverging, says, "U.S. prime money market funds (MMFs) continued to reduce their exposure to euro zone banks." The Investment Company Institute also produced an analysis earlier this month, titled, "Data Update: Money Market Funds and the Eurozone Debt Crisis." Finally, we excerpt a little bit from Federated Investors' 4th Quarter Earnings release, which shows that fee waivers continue to bite hard at money fund manager's revenue and earnings. (Federated's earnings conference call is this morning at 9 a.m.)

Fitch Ratings's commentary explains, "As of month-end December, exposure to euro zone banks was approximately 10% of total MMF holdings in Fitch Ratings' sample, a 16% decline on a dollar basis since end-November (see the "Euro Zone Continues to Decline" chart). Aggregate MMF exposure to European banks outside of the euro zone remained stable at approximately 22% of MMF holdings. Exposure to banks in Australia, Canada, and Japan each increased relative to end-November (see the "Change in Exposure [on a Dollar Basis]" table) and represents more than 30% of MMF assets, up from 20% of MMF assets as of end-May 2011."

It adds, "The proportion of exposure to European banks in the form of repurchase agreements (repos) remained above historically observed levels. As of month-end December, repos represented 24% of total European exposure, a slight decline from end-November but still above the end-August level of 17%.... This increase in repos (and proportionate reduction in unsecured MMF exposure) mirrors broader shifts toward secured funding within European bank debt markets.... Short-term U. S. Treasurys and agencies continued to represent approximately 19% of MMF assets, which is unchanged since end-November but a sizable allocation relative to historical levels." (See also The Wall Street Journal quotes Fitch's numbers in "U.S. Money-Market Funds Cut Euro Zone Bank Debt Holdings".)

ICI's recent piece on European exposure in MMFs, by Emily Gallagher and Chris Plantier, comments, "In October and December, we discussed how portfolio managers of U.S. prime money market funds have addressed the ongoing debt crisis in the eurozone. Here is a look at the latest monthly data on these funds' holdings by home country of issuer. Holdings of French issuers continued to fall in December, and almost 80 percent of these French holdings are either short-dated collateralized repurchase agreements or other instruments that mature in seven days or less. We will revisit the topic in mid-February with updated analysis once January figures become available."

Lastly, Federated Investors says in its latest earnings release, "Federated Investors, Inc. (NYSE: FII), one of the nation's largest investment managers, today reported earnings per diluted share (EPS) of $0.36 for the quarter ended Dec. 31, 2011 as compared to $0.45 for the same quarter last year. Net income was $36.9 million for Q4 2011 compared to $46.4 million for Q4 2010. The decrease of $9.5 million primarily relates to an increase in the negative impact of money market fund minimum-yield waivers."

The release adds, "Money market assets in both funds and separate accounts were $285.1 billion at Dec. 31, 2011, up $9.1 billion or 3 percent from $276.0 billion at Dec. 31, 2010 and up $13.4 billion or 5 percent from $271.7 billion at Sept. 30, 2011. Money market mutual fund assets were $255.9 billion at Dec. 31, 2011, up $11.1 billion or 5 percent from $244.8 billion at Dec. 31, 2010 and up $10.6 billion or 4 percent from $245.3 billion at Sept. 30, 2011."

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