- Money market fund experiences strong growth since its launch in 2013
- Institutional investors are seeking to maximise returns in current low yield environment
BlackRock’s Institutional Euro Assets Liquidity Fund has surpassed €1 billion of assets under management, less than a year since its launch in April 2013. The growth of this money market fund demonstrates institutional investors’ willingness to look at alternative ways of seeking returns in this current low yield environment.
Financial institutions and corporations use money market funds to manage their cash as they offer stability, daily liquidity and diversification benefits. Current yields in European money markets are low, driven down by forces including prolonged ultra-low interest rates, a diminishing supply of investible short-dated money market instruments, decreasing bank appetite for cash balances, and sovereign and bank ratings downgrades.
BlackRock’s Institutional Euro Assets Liquidity Fund is unrated by external ratings agencies, meaning it has more flexibility to seek higher yields in these current conditions. The fund is able to step away from the inflexible requirements imposed by ratings agencies on AAA-rated money market funds - such as a 5 per cent issuer limit - and is able to extend duration on investments the portfolio team believe offer value. The fund has the same robust risk management and investment approach, and undergoes the same extensive internal stress tests, as BlackRock’s rated money market funds.
Bea Rodriguez, Head of Portfolio Management for Cash Management at BlackRock, said: “We are living in a world where interest rates and the supply of eligible issuers remain low, and institutions seeking yield are increasingly looking to their investment managers to provide solutions. This Fund is specifically designed to help institutions adapt to this challenging market, and provide the returns that investors are after in a flexible and transparent manner.”
BlackRock’s Euro money market range includes the ICS Euro Liquidity Fund (€12.4bn assets) and ICS Euro Government Liquidity Fund (€1.1bn AUM) which is the largest vehicle of its type in the market and remains available to both existing and new investors. BlackRock manages $276bn across its global money market fund range, and is the largest asset manager by assets in the Euro and Sterling money market fund industry.