Calastone, a U.K.-based fund technology provider, published a white paper entitled, "Money Market Funds in Uncertain Times: Investors demand digitalisation and resilience." Managing Director Simon Keefe writes in the introduction, "Money market funds (MMFs), investing in high-quality, short-term debt instruments, play a key role in investors' portfolios, offering a balance of security, liquidity and yield. This survey reveals investors' views on the current MMF investment process -- their value drivers, the opportunities for improvement, and the future potential for the industry. We commissioned ... an independent online survey of 150 decision-makers from corporations and financial institutions (FIs) in major financial hubs -- the United States, the United Kingdom, Singapore and Hong Kong. The quantitative survey was supplemented by eight qualitative interviews to add depth and colour to the data." Among the report's Key Findings: "Seventy-one percent of investors say that their strategic priority for MMFs is to improve capital and liquidity management, as firms use MMFs when they need to achieve a balance of liquidity, security and returns. This is a challenging balance to achieve amidst today's low interest rate environment; Complexity and friction come from multiple areas in the investment process, which are compounded for firms that invest in multiple funds with different investment managers through different channels; and, 61% of firms use three or more fund providers, and 64% hold three or more funds from each provider. In addition to this, 48% of firms access and manage their investments through two or more channels, creating further complexity." The "most-often cited criteria" for selecting funds are: "yield (70%) and fees (57%) ... Safety, or risk profile (49%), reputation of the investment firm (47%) and Liquidity/redemption (45%)." The paper tells us, "With yields currently depressed, investors are under pressure to improve the efficiency and performance across the MMF investment process and reduce costs that drag down overall returns.... The inefficiency is most noted by larger corporates and FIs who hold significant investment volumes with multiple fund providers managed through a suite of systems and portals." Calastone explains, "Once firms have made the decision to invest in MMFs as part of their capital and liquidity management strategies, they turn to reviewing and selecting specific funds. At this point, when selecting specific funds to invest in, return becomes the most important consideration." They also comment, "The integration of systems and processes continues to be a recurring challenge. Aside from those with large trade volumes, there are also more potential points of friction for other investors who have to deal with multiple funds from multiple providers through a variety of systems. Almost two-thirds of firms (61%) use three or more fund providers. Compounding the complexity, almost two-thirds (64%) hold three or more funds from each provider." The survey states, "While the overwhelming majority of respondents use portals as the primary way they manage their funds ... findings show that they also use multiple systems in addition to portals, such as order management systems, treasury management systems, providers to source market rates and data, and the like." Finally, on "transparency," the paper adds, "Overall, investors note the challenges of accessing real time insights on fund composition (42%), fund performance (30%) and a consolidated view of all their MMF investments (33%). Fee transparency is also a top three issue, reinforcing the need for greater visibility throughout the process."

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