Fitch published a "2013 Outlook: Global Money Market Funds" last week. It said, "Fitch expects the low interest rate environment to persist through 2013 and well in to 2014 (see Global Economic Outlook, December 2012). Thus MMF gross yields will remain low and may turn negative, especially for euro MMFs. Negative MMF yields resulting from the short-term rate environment would not be a negative rating factor for Fitch-rated MMFs (see Fitch: Potentially Negative Euro Yields Won't Impact MMF Ratings, September 2012). A number European MMFs took proactive steps in 2012 enabling them to pass on potential negative yields to investors. The essence of the negative yield distribution mechanism is based on keeping the net asset value per share stable at the initial subscription price per share. Instead, an appropriate number of shares on the investor's accounts is to be redeemed to reflect pro-rata the reduction of the fund's value incurred through investments in assets producing the negative yield.... MMFs domiciled in the US and core European countries claim 82% of the total USD4.6 trillion in assets under management of MMF globally.... The remaining 18% of the global MMF assets are managed in Asia-Pacific, Other Europe, Latin America and Africa. Figure 13 illustrates the declining trend in assets under management of US and European MMFs, while the Asia-Pacific region has shown growth of +30% over the same period, driven by Australia (+53%) and China (+140%), which together now represent USD380bn in assets."
