Online money market fund trading "portal" Institutional Cash Distributors released its "2018 ICD Client Survey" results, which summarize feedback from some of the largest companies in the world on money market funds, repatriation and a number of cash investment issues. A press release entitled, "Corporate Treasury Trends Revealed in ICD's 2018 Client Survey Results," explains, "Survey highlights include: 63% of U.S. respondents plan to repatriate cash in 2018; 42% of U.S. respondents are invested in U.S. Prime MMFs, projected to grow to 63% by the end of 2018; 19% of global respondents plan on changing or adding a Treasury Management System (TMS) over the next 12 months; and, 99% of global respondents rated ICD's Customer Service as excellent or above average, with the vast majority giving a rating of excellent." (`Note: We'd like to invite any clients or fund managers attending the "ICD Roadshow" in LA on March 22 to stop by our Bond Fund Symposium the morning before or the day after ICD's event and to encourage those attending BFS to make hotel reservations ASAP. Crane's Bond Fund Symposium takes place nearby at The LA InterContinental Downtown, March 22nd and 23rd.)
The press release explains, "Institutional Cash Distributors (ICD), the world's largest independent institutional investment portal with aggregate client balances totaling $120 billion, today released its 2018 ICD Client Survey Results. Surveys were sent to each of ICD's 300+ clients with 143 providing responses. When asked about repatriation, nearly two-thirds of U.S. respondents said they will repatriate cash to the U.S. in 2018, with half doing so in Q2. ICD clients include many of the world's largest companies, including seven of the top eleven S&P 500 Index companies ranked by overseas cash balances."
ICD Co-Founder and Managing Director Tom Newton comments, "Understanding our clients' repatriation timing is important to ensure investment supply is available to meet demand. We are beginning to see the first wave of repatriated investments coming in and are preparing for increased demand in Q2." (Year-to-date in 2018, offshore USD assets have increased by $19 billion to $445 billion, after increasing by $27 billion in 2017, according to Crane's Money Fund Intelligence International.)
ICD's release continues, "Many of the respondents plan to considerably widen their investment portfolio in 2018, with U.S. Prime MMF investors expecting to increase from 42% to 63% in 2018. Globally, Short Duration Bond Funds are expected to see the most growth in 2018, followed by Time Deposits, U.S. Treasuries, U.S. Agencies and Commercial Paper."
Co-Founder and Managing Director Jeff Jellison explains, "We lead the industry in U.S. Prime MMF Reform solutions, which enables many of our clients to invest in U.S. Prime MMFs. We are encouraged to see that many more will be taking advantage of the higher yields associated with Prime MMFs in 2018."
The release explains, "ICD's 2018 Client Survey also revealed significant client activity regarding upgrading TMS systems with 19% of survey respondents indicating their intent to change or add a TMS over the next 12 months. The survey shows the most widely used TMS platforms are Kyriba, ION (Reval, Wall Street Systems and Treasura), Logotech, FIS, SAP and GTreasury. ICD has a dedicated technology team that focuses on creating, maintaining and enhancing integrations with TMS and ERP systems, clearing and custody firms, transfer agents, fund companies, data providers, electronic trading platforms, analytics applications and banks." (TMS stands for Treasury Management System.)
It adds, "The Client Survey confirms ICD's commitment to customer service with 99% of respondents rating ICD customer service as excellent or above average, with the vast majority giving a rating of excellent."
Ed Baldry, ICD Co-Founder and Global Head of Sales, tells us, "We expect to further increase our competitive advantages with Parthenon Capital Partner's recent growth investment in ICD. We've added several customer service and technology specialists to the team and we will add many more over the coming months in our ongoing mission to provide superior technology and extraordinary customer service." (See our Oct. 16, 2017 News, "ICD Releases Treasury Options Paper, Announces Parthenon Investment.")
In other news, J.P. Morgan Securities recently published its latest "Taxable money market fund holdings update." They comment, "January MMF holdings reports show a significant reversal in repo exposures following year-end. Repo balances with MMFs increased $150bn to $874bn month over month, while Fed RRP balances fell $231bn.... Not surprisingly, much of the increase was driven by French banks, which saw their exposures grow by $109bn month over month. As of January month-end, MMF repo exposures to French banks stood at $228bn, the third highest month on record. French repo exposures in MMFs were highest in November 2017 at $252bn, followed by October 2017 at $245bn. Separately, repo cleared through FICC fell by $13bn month-over-month, and as of January month-end stood at $21bn."
The update tells us, "Government MMFs rotated their exposures out of RRP and Treasury/Agency coupons and floaters, and into repo, bills, and discos. Month over month, their RRP balances declined by $180bn, while their repo exposures increased by $150bn. Said another way, 83% of MMFs' RRP balances went back into repo.... This is slightly lower than last January at 93% as well as lower than other months immediately following quarter-ends. The remainder seemed to have rotated out of RRP and into bills and discos as balances increased by $37bn and $27bn, respectively. This makes sense as the curve between overnight repo and 3m term bills/discos steepened to 13bp, the highest we've seen post quarter-ends over the past year."
Finally, JPM adds, "Prime MMFs' exposure to Yankee banks increased by $15bn, with much of the increase attributable to CDs and time deposits.... Again, French banks drove the rise in balances, followed by banks domiciled in the Netherlands and Sweden. Interestingly, nearly all other non-European banks saw their exposures decline in prime MMFs." (See also our Feb. 12 News, "Feb. Money Fund Portfolio Holdings: TD, CP, CDs Jump; Repo Plummets.")
