“These increases were driven by large inflows into Chinese funds, with assets in these funds increasing by 16.9% during the first half of the year. »
“The inflow of capital into these safe assets has been driven by volatility in the equity and fixed income markets, as well as the yield advantage offered by [fonds du marché monétaire] Chinese compared to current account interest rates. This makes this type of fund an attractive short-term cash stop given that the market is primarily financed by individuals,” according to the rating agency.
Assets of US-based funds grew just 3.3% in the first half to US$6.5 trillion.
“Demand for Treasury and government money market funds remains robust,” underlines Fitch Ratings. However, assets of prime institutional money market funds saw a significant decline, falling 32.8% during the first half of the year, due to upcoming regulatory reforms.
“This decline is attributed to asset managers who closed or converted their prime money market funds in anticipation of the upcoming implementation of mandatory liquidity fees,” analyzes the rating agency.
Conversely, “prime retail” funds, which are not affected by the reforms, saw their assets increase by 12% during the first half of the year. As a result, the size of prime retail funds has now surpassed that of the prime institutional funds market, Fitch Ratings observes.
European funds also saw their assets increase by 6.3% in the first half, to €1.9 trillion.
Looking ahead, the rating agency expects global money market fund assets to stabilize amid easing monetary policy.
“Further interest rate cuts are expected in Europe and the US in the fourth quarter, which could lead to accelerated outflows from money market funds as investors may start looking for alternative strategies to lock in higher returns . »
For 2025, Fitch Ratings expects regional fund flows in Europe and the United States “to be influenced not only by the speed and magnitude of these reductions, but also by the duration positioning of fund managers.” funds and fund returns.
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