(The following statement was released by the rating agency)
Link to Fitch Ratings' Report: Developments in âSecond Tierâ Money Fund
Domiciles
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=869631
BEIJING/LONDON/HONG KONG, September 15 (Fitch) The assets of money market funds
(MMFs) in Brazil and India have increased significantly, compared with the
decline seen in funds in Canada and Taiwan and stable asset bases of funds in
South Africa and Mexico, says Fitch Ratings in a new report.
These "second tier" money fund domiciles - Korea, Mexico, Brazil, India, Taiwan,
Canada and South Africa - collectively comprise 6% of global money fund assets
under management (AUM). The diverging trends in these markets reflect
differences in yields and importance in the broader fund sector.
AUM in money funds globally have shrunk 10% over the last five years to
approximately USD4.5trn as of end-2014 (excluding Australia). The decline is
approximately 5% after eliminating the appreciation effect of dollar against
other currencies. MMFs are concentrated in few core markets: US (60%), Europe
(25%) and China (7%).
AUM of money funds in China have surged eight-fold over the past five years,
pushing it past Korea to become the third-largest MMF market. AUM of money funds
in Brazil have almost tripled in the last five years and that in India have more
than doubled. In contrast, AUM in US money funds have shrunk by around 18% since
2009, while Europe money funds have contracted about 3% over the same time
period.
Money funds in Brazil and India offer investors the highest nominal yields, when
compared to other jurisdictions. Nominal yields in Taiwan and Canada are near
zero, more in line with the typical yield of US money funds. In Europe even
nominal yields on money funds are currently negative.
The share of money funds' AUM relative to total mutual fund AUM has decreased
across most jurisdictions over time. Money funds dominate the mutual fund market
in Mexico and Taiwan, while in Canada money funds play a less important role.
Korea is the only country among these "second tier" markets to have seen its
money fund share expand since 2011.
Money funds are less utilised in terms of broad money supply in these "second
tier" jurisdictions, unlike in the US where Fitch estimates that money funds
account for over 20% of broad money supply (M2). Money funds represent less
than 5% of broad money supply in India, Canada, Korea and Taiwan. The lower
penetration rate of money funds could suggest potential for growth.
Fitch's special report titled "Paths Diverge for "Second Tier" Money Fund
Domiciles" is available at www.fitchratings.com or via the link in this media
release.
Note to readers: Australia is excluded from this analysis due to limited data
availability and according to International Organisation of Securities
Commission (IOSCO) "money market fund" is not a defined term under the
Australian regulatory regime.
Contact:
Li Huang
Associate Director
+86 21 5097 3018
Fitch Ratings (Beijing) Ltd.
10/F, 8 Century Avenue, Pudong
200120 Shanghai
Alastair Sewell, CFA
Senior Director
+44 20 3530 1147
Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email:
elaine.bailey@fitchratings.com; Bindu Menon, Mumbai, Tel: +91 22 4000 1727,
Email: bindu.menon@fitchratings.com; Leslie Tan, Singapore, Tel: +65 67 96 7234,
Email: leslie.tan@fitchratings.com; Leni Vu, Sydney, Tel: +61 2 8256 0304,
Email: leni.vu@fitchratings.com; Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935,
Email: wailun.wan@fitchratings.com.
Additional information is available on www.fitchratings.com
Related Research
2015 Outlook: Money Market Funds
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=822469
Chinese Money Market Funds: Growth Set to Slow
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=861868
European MMF Quarterly - 2Q15
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=869660
SEC Reforms Money Fund Structure
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=753758
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