IRELAND- Standard Life Investments has launched a new US dollar money market fund to complement its Dublin-based sterling and Euro-denominated sub funds.
The latest addition to Standard Life’s AAA cash fund comes just eighteen months after the sterling and Euro fund were listed on the Irish stock exchange. Since then the pair have, between them, raised over £1bn in third party assets.
Kevin Thompson, head of money market funds at Standard Life, says growth in the market is in part due to investors. “In the last eighteen month there has been a lot of focus on cash. We’ve seen a lot of growth in sterling and dollar balances. It made sense to plug the gap and offer all the three major currencies.”
Thompson says the focus on cash is more than just tactical asset allocation as a consequence of volatile markets. “People are actually making their cash work for them for the first time ever. It’s hard to see any correlation between equity markets and inflows into the money market funds.”
Over the last two years the value of funds invested in Dollar, Sterling and Euro funds has risen almost five fold from e28bn to e125bn, fuelled predominantly by growth in the Sterling and Dollar sectors.
Standard Life, which manages over £80bn, designed the funds as an alternative to inter bank loans for corporate investors with short dated cash balances. Both its Sterling and Euro funds have received UCITS status and have been awarded Aaa/MR1+ credit and market risk ratings by Moody’s.
Others have capitalised on the demand for cash funds. In May Edinburgh-based Scottish Widows Investment Partnership (SWIP) received regulatory approval from the UK’s FSA to market 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 it listed in Dublin in March.
Research produced by fund analysis group Fitzrovia shows that 30%, or e225bn, of total net assets held by the largest promoters of Dublin and Luxembourg funds are in short term and cash funds.