UK- Edinburgh-based Scottish Widows Investment Partnership (SWIP) has received regulatory approval from the UK Financial Services Authority (FSA) to begin marketing the firm’s Global Liquidity Fund in the UK, giving the firm access to a market it says could be worth tens of billion of pounds in pension fund, insurance company and corporate cash in the UK alone.
The SWIP Sterling liquidity sub-fund is already one of the largest sterling institutional money market funds in the world and has attracted £3.5bn (€5.6bn) of investment since its listing on the Dublin stock exchange in March this year.
SWIP can now start selling the Moody’s Aaa/MR1+ rated fund into the UK institutional market, where it is estimated that there could be up to £100bn (€160bn) in cash deposits that are not optimally invested.
Chris Walker, head of institutional division at SWIP, comments: “Estimates show that there are many tens of billions of pounds which UK plc is currently keeping in the wrong place. The US market has proved the attractiveness of liquidity funds and I’m sure the UK and European markets will follow suit.”
SWIP says its global liquidity fund is designed to offer treasurers and investment managers with an alternative to traditional short-term money market deposits for their corporate pension schemes and short-term cash.
Changes made to UK local government regulations on April 1 this year also mean that local authorities can now invest cash deposits in such liquidity funds.
Minimum initial investment in the fund for the institutional share class is £5m and the fund operates on a stable net asset value per share basis.
Sources close to SWIP indicate that the firm is also looking to launch both euro and dollar denominated class liquidity funds before the end of the year.