Over this past weekend, J.P. Morgan became the first major manager of European money market funds become fully compliant with the new European Money Fund Reforms, which go live on Jan. 21, 2019. J.P. Morgan Global Liquidity posted a brief, "Important announcement for Global Liquidity clients: European Money Market Fund Regulations," which tells us, "J.P. Morgan Global Liquidity's implementation of the European Money Market Funds Regulations is now complete on the Luxembourg domiciled Global Liquidity funds. J.P. Morgan Global Liquidity is committed to ensuring that investors have the best experience. Please reach out to us if we can be of any assistance." (NOTE: Crane Data is closed Wednesday, 12/5, due to the National Day of Mourning honoring President George H. W. Bush. Our News, Link of the Day, and MFI Daily publication will be back tomorrow.)
It adds, "As a global leader in the liquidity space, J.P. Morgan Asset Management's Global Liquidity group manages USD 597.6 billion in asset under management (as of 30 September, 2018). The team is made up of 132 dedicated global liquidity professionals with 21 average years of portfolio management and credit research industry experience in 7 countries and 5 global service centers ensuring 24 hour coverage.... J.P. Morgan Asset Management, with assets under management of USD 1.72 trillion (as of 30 September, 2018), is a global leader in investment management. J.P. Morgan Asset Management's clients include institutions, retail investors and high-net worth individuals in every major market throughout the world."
A related press release, entitled, "Four J.P. Morgan Asset Management Money Market Funds Assigned 'AAAm' Ratings," tells us, "S&P Global Ratings today assigned 'AAAm' principal stability fund ratings (PSFRs) to four Luxembourg-domiciled short-term variable net asset value (VNAV) money market funds sponsored by J.P. Morgan Asset Management (Europe) S.A.R.L (JPMAM). The four VNAV subfunds are part of JPMorgan Liquidity Funds, a Société d'Investissement à Capital Variable structure that also qualifies as an Undertaking for Collective Investments in Transferable Securities (UCITS)."
It explains, "The PSFRs reflect our view of the creditworthiness of the funds' investments and counterparties, their investments' maturity structure, and management's ability and policies to maintain the funds' net asset value. The 'AAAm' demonstrates extremely strong capacity to maintain principal stability and to limit exposure to principal losses due to credit risk. 'AAAm' is the highest PSFR assigned by S&P Global Ratings."
S&P's statement continues, "The four short-term VNAV funds assigned 'AAAm' PSFRs are: JPMorgan Liquidity Funds – EUR Liquidity VNAV Fund; JPMorgan Liquidity Funds – GBP Liquidity VNAV Fund; JPMorgan Liquidity Funds – USD Liquidity VNAV Fund; and, JPMorgan Liquidity Funds – USD Treasury VNAV Fund. The subfunds, which launch today, are part of JPMAM's expanded money market fund product range domiciled in Luxembourg reflective of EU money market fund regulations (Regulation (EU) 2017/1131 of the European Parliament and of the Council of 14 June 2017 on Money Market Funds)."
It says, "Within its Luxembourg liquidity funds, JPMAM offers eight credit subfunds across Australian dollars, euro, pound sterling, Singapore dollars, and U.S. dollars. Three of the funds assigned PSFRs today fall into the credit category--EUR Liquidity VNAV Fund, GBP Liquidity VNAV Fund, and USD Liquidity VNAV Fund. The USD Treasury VNAV is a government subfund among five other government subfunds offered in either pound sterling or U.S. dollars."
S&P Global writes, "The subfunds will be managed within JPMAM's global liquidity business, which manages approximately US$600 billion in liquidity and short-duration assets. In our view, as part of a global organization, the global liquidity team is a highly experienced group of investment professionals who incorporate a risk-controlled and value-oriented approach to cash and short-duration fixed-income management. Money market investment practices are conservative, in our view, and supported by rigorous investment research and sound risk management infrastructure reflective of an asset manager overseeing liquidity assets for institutional clients."
They add, "The investment objective of the subfunds is to achieve a return in the reference currency in line with prevailing money market rates while aiming to preserve capital consistent with such rates and maintain a high degree of liquidity. To achieve this objective, the funds will seek to invest in a variety of money market instruments, including asset-backed commercial paper, deposits with credit institutions, and reverse repurchase agreements within a maturity of 397 days, which meets our PSFR final maturity threshold."
Finally, the release comments, "An S&P Global Ratings' PSFR, also known as a "money market fund rating," is a forward-looking opinion about a fixed-income fund's capacity to maintain stable principal and to limit exposure to principal losses due to credit risk. We will monitor the portfolios on a weekly basis as part of our surveillance practices."
For more, see Crane Data's Sept. 5 News, "JPMorgan on European MMF Reforms; Aviva First to Convert to LVNAV," as well as JPMAM's "Proposed fund transition plan: European Money Market Fund Regulations," and "European Money Market Fund Reform Resource Centre."
