Global money market assets surged: Fitch

Amid high interest rates, assets under management (AUM) in the global money market fund sector soared last year — as rates come down, fund flows should stabilize, Fitch Ratings says.

Globally, money market funds saw assets surge by 17% to US$9.9 trillion in 2023, the rating agency reported.

Most of the rise in assets came in the second half of the year, it said.

The U.S. sector led the way, with assets in money market funds jumping 21% in 2023 to US$6.3 trillion, which the rating agency said was “driven by investors taking advantage of high interest rates and deposit outflows after the U.S. regional bank failures.”

Outside of the U.S., growth was slower.

Fitch estimated that European funds’ AUM increased by 11% last year to €1.8 trillion, and that in China assets rose 8%.

Looking ahead, Fitch said money market fund flows are expected to slow this year.

“Central banks’ interest rates cuts in [the second half], and regulatory reform in the U.S. and China money fund sector [will] have a limited impact on overall flows, although faster-than-expected rate cuts may accelerate [money market fund] outflows,” it said.

That said, Fitch noted that it expects industry flows to remain stable as it takes time for rate cuts to flow through to funds’ yields.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.