UK money market assets “likely” to remain after Brexit

BrexitAssets under management in UK money market funds (MMFs) would stay there even if Britain voted to leave the EU, says Moody’s, a ratings agency. Moody’s Investors Service says a Brexit would not prompt any major changes in European money market fund managers' operations or management strategy, and the total $258 billion (€224 billion) of assets managed in the UK would “likely” remain there. Moody’s surveyed 12 EU-based asset management companies about the impact the separation could have on their MMF business. "Should the UK decide to leave the EU, it would be a non-event for the European money market fund industry," said Vanessa Robert, senior credit officer at Moody's. "Most managers surveyed believe that MMFs would be seen as a safe asset class and MMF assets would therefore remain stable or could even benefit from a flight to quality amid uncertainty in the financial markets.” Nevertheless, half of the respondents would increase their portfolio liquidity ahead of the vote, the survey found. Respondents did say it would be critical for asset managers to maintain the Ucits passport, as nearly half of all European constant net asset value MMF assets are sold to non-UK clients through the passporting facility. If the UK were to leave the EU, distribution teams would have to be located in one of the EU countries for Ucits MMFs to continue to be distributed in Europe. ©2016 funds europe

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