Crane Data's latest MFI International shows total assets in "offshore" money market mutual funds, U.S.-style funds domiciled in Ireland or Luxemburg and denominated in USD, Euro and GBP (sterling), flat overall year-to-date in 2018. Through 12/13/18, MFII assets are down $2 billion to $828 billion. Offshore USD money funds are up $15 billion YTD, continuing to defy predictions of repatriation-related outflows. Euro funds are still feeling the pain of negative rates and pending European MMF reforms; they're down E5 billion YTD. GBP funds are down L7B. U.S. Dollar (USD) money funds (174) account for over half ($441 billion, or 53.2%) of this "European" money fund total, while Euro (EUR) money funds (100) total E93 billion (11.3%) and Pound Sterling (GBP) funds (104) total L211 billion (25.5%). We summarize our "offshore" money fund assets, as well as our latest Money Fund Intelligence International Portfolio Holdings totals, below.

USD MMFs yield 2.16% (7-Day) on average (as of 12/14/18), up from 1.19% at the end of 2017 and 0.56% at the end of 2016. EUR MMFs yield -0.48 on average, up from -0.55% on 12/29/17 and -0.49% on 12/30/16, while GBP MMFs yield 0.63%, up from 0.24% at the end of 2017 and 0.19% at the end of 2016. (See our latest MFI International for more on the "offshore" money fund marketplace.)

Crane's latest MFI International Money Fund Portfolio Holdings, with data (as of 11/30/18), show that European-domiciled US Dollar MMFs, on average, consist of 26% in Commercial Paper (CP), 21% in Certificates of Deposit (CDs), 15% in Treasury securities, 21% in Repurchase Agreements (Repo), 15% in Other securities (primarily Time Deposits), and 2% in Government Agency securities. USD funds have on average 35.8% of their portfolios maturing Overnight, 9.5% maturing in 2-7 Days, 17.5% maturing in 8-30 Days, 13.8% maturing in 31-60 Days, 11.0% maturing in 61-90 Days, 8.8% maturing in 91-180 Days, and 3.6% maturing beyond 181 Days. USD holdings are affiliated with the following countries: US (25.7%), France (16.3%), Japan (10.9%), Canada (10.6%), United Kingdom (6.5%), Germany (5.2%), Sweden (5.0%), Australia (3.6%), The Netherlands (3.5%), Switzerland (2.6%), Singapore (2.6%), and China (2.2%).

The 10 Largest Issuers to "offshore" USD money funds include: the US Treasury with $72.1 billion (14.9% of total assets), BNP Paribas with $27.0B (5.6%), Credit Agricole with $15.6B (3.2%), Mitsubishi UFJ Financial Group Inc with $15.6B (3.2%), Barclays PLC with $13.6B (2.8%), Wells Fargo with $13.1B (2.7%), Mizuho Corporate Bank Ltd with $13.0B (2.7%), Toronto-Dominion Bank with $11.9B (2.5%), Societe Generale with $11.0B (2.3%), and Bank of Nova Scotia with $10.2B (2.1%).

Euro MMFs tracked by Crane Data contain, on average 45% in CP, 25% in CDs, 21% in Other (primarily Time Deposits), 8% in Repo, 0% in Agency securities, and 1% in Treasuries. EUR funds have on average 24.2% of their portfolios maturing Overnight, 7.1% maturing in 2-7 Days, 13.5% maturing in 8-30 Days, 22.7% maturing in 31-60 Days, 15.7% maturing in 61-90 Days, 13.3% maturing in 91-180 Days and 3.4% maturing beyond 181 Days. EUR MMF holdings are affiliated with the following countries: France (30.6%), Japan (15.7%), the US (9.8%), Sweden (7.2%), Netherlands (6.5%), Germany (6.2%), U.K. (4.7%), China (3.4%), Switzerland (3.0%) and Belgium (2.8%).

The 10 Largest Issuers to "offshore" EUR money funds include: Credit Agricole with E5.8B (6.6%), BNP Paribas with E4.0B (4.6%), Mizuho Corporate Bank Ltd with E3.6B (4.1%), Svenska Handelsbanken with E3.0B (3.4%), Credit Mutuel with E2.6B (3.0%), Nordea Bank with E2.6B (2.9%), Procter & Gamble Co with E2.6B (2.9%), Sumitomo Mitsui Trust Bank with E2.5B (2.9%), BPCE with E2.4B (2.8%) and ING Bank with E2.4B (2.8%).

The GBP funds tracked by MFI International contain, on average (as of 11/30/18): 34% in CDs, 28% in Other (Time Deposits), 22% in CP, 10% in Repo, 5% in Treasury, and 1% in Agency. Sterling funds have on average 23.5% of their portfolios maturing Overnight, 6.8% maturing in 2-7 Days, 12.0% maturing in 8-30 Days, 21.7% maturing in 31-60 Days, 20.2% maturing in 61-90 Days, 12.9% maturing in 91-180 Days, and 3.0% maturing beyond 181 Days. GBP MMF holdings are affiliated with the following countries: France (18.7%), Japan (16.0%), United Kingdom (13.7%), Canada (9.7%), Netherlands (7.5%), Australia (6.5%), Germany (5.8%), United States (5.0%), Sweden (4.7%), and Singapore (2.6%).

The 10 Largest Issuers to "offshore" GBP money funds include: UK Treasury with L7.7B (6.1%), Mizuho Corporate Bank Ltd with E5.3B (4.2%), BNP Paribas with L4.8B (3.8%), Sumitomo Mitsui Trust Bank with L4.5B (3.6%), Mitsubishi UFJ Financial Group with L4.3B (3.4%), BPCE SA with L4.2B (3.3%), Credit Agricole L4.2B (3.3%), Toronto-Dominion Bank with L4.0B (3.2%), Nordea Bank with L3.7B (3.0%) and ING Bank with E3.1B (2.5%).

In other news, ICI published a brief entitled, "Understanding Interest Rate Risk in Bond Funds." They say, "For investors in bond funds, one significant concern is interest rate risk. In general, interest rate risk reflects the possibility that the value of a bond will change when prevailing interest rates rise or fall. The value of a bond generally moves in the opposite direction from interest rates: for example, when interest rates rise, prices for fixed-rate bonds will fall. Because bond funds are made up of a collection of individual bonds, bond fund investors should expect an increase in the level of interest rates to have a negative impact on the value of their investment."

The piece asks, "Why does this matter? Long-term interest rates reached their lowest recorded levels in July 2016 and were on a steady upward trend until early December. Rates dipped recently, but that could be short-lived if global trade tensions ease and the outlook for economic growth remains robust. Investors should be aware of the effects rising interest rates could have on their bond fund investments."

They explain, "Interest rate risk is commonly measured by duration -- the degree of sensitivity of a bond's price to rate movements. If interest rates were to change tomorrow, duration (commonly expressed in years) tells us how much the price of a bond should change in the opposite direction.... In general, the longer a bond's remaining maturity, the higher its duration will be and the more its price will change as interest rates change."

Finally, ICI adds, "Duration in a bond fund is generally determined by taking the weighted average of the durations of all the bonds the fund holds in its portfolio. For a bond fund with a duration of four years, a 1 percentage point increase in interest rates alone would be expected to lower the overall net asset value of the fund by 4 percent."

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