J.P. Morgan Asset Management annual global liquidity investor survey reveals money in motion in face of European regulatory change



  • Likely driven by upcoming money market fund reforms, more than half of European treasurers will consider changing their investment policies and will re-evaluate cash decision making
  • To mitigate impact of negative deposit rates, European cash investors are significantly more likely to have increased credit risk compared to corporate treasurers in the Americas and Asia

London: More than half of European liquidity investors (58%) are considering changing their investment policies to cope with the evolving regulatory environment, according to data released today by J.P. Morgan Asset Management. The ‘J.P. Morgan Asset Management Investment PeerView 2017’ survey polled treasurers, chief investment officers and senior cash decision makers around the globe collectively representing more than $1.2 trillion in cash assets under management, including 129 companies across Europe.

The Council of the European Union recently formalised new money market rules, which will go into effect in late 2018 or early 2019. The long-awaited confirmation will bring some meaningful changes to money market funds, including certain stricter liquidity and redemption requirements.

“The new regulations will prompt change, but it’s important to point out that they provide a level of optionality which will ultimately allow money market funds to continue to offer investors the advantages that they currently enjoy,” said Jim Fuell, Head of International Global Liquidity Sales at J.P. Morgan Asset Management.

“Whilst investors may not have been widely aware of gates/fees aspects of many short-term cash investment options, they’ve actually always been embedded in the structure of UCITs and in fact are not that much of a departure,” continued Fuell.

Although the majority of European cash investors are already pondering investment policy changes, 44% of respondents said they need more time and/or information before they decide on their preferred money market fund structure under the new rules. Among those considering new structures, 43% ranked risk of gating or a liquidity fee as the most important factor in their decision-making process.

“At this stage the LVNAV (low volatility NAV) money market fund option is expected to be the likely choice for many investors. Thus far, this option is being viewed as most akin to the CNAV (constant NAV) short term money market fund to which many investors are currently allocated,” said Fuell.

Amongst other key findings of the J.P. Morgan Asset Management Investment PeerView 2017 survey for European investors:

  • Although treasurers are first and foremost focused on capital preservation and liquidity, yield remains an important consideration. Capitalising on current yield opportunities and anticipating what is likely to be an environment of slowly rising rates, respondents globally reported a net increase in expected allocations to stable NAV, floating NAV and ultra-short/short-term bond funds over the next year. Specifically in Europe, nearly one quarter (24%) of respondents are considering increasing their investment in floating NAV money market funds in the next year.
  • European firms are not standing still in the face of negative deposit rates. They are significantly more likely to have increased credit risk compared to companies in the Americas and Asia Pacific (35% vs. 15% and 16%, respectively). This indicates increased appetite for moderately riskier assets as well as limited capacity from European banks to hold cash on deposit given Basel III.

“As this survey shows, we continue to observe an evolution in cash segmentation (categorising cash by liquidity need) that corporate treasurers are increasingly undertaking, with 70% of respondents saying they can forecast cash flows out for a month or longer. This has led to treasurers becoming more strategic with their non-immediate cash in a continued low rate environment. With appropriate segmentation, liquidity investors can benefit from allocating a portion of their cash to a broader investible universe with greater corporate diversity, whilst maintaining a highly risk controlled environment,” concluded Fuell.


Plans for Investment Policy Changes




Most recent episodes

Audio TMI - ESG: Time to Decide

The pressure to comply with ESG initiatives is being felt by corporates like never before, with ESG-compliance a common concern among treasury departments. TMI talks to Lavinia Bauerochse (Deutsche Bank) about treasury’s ...


Embedded Finance: A 101 Guide for Treasurers

Our latest TreasuryCast guest, Aman Narain (HSBC) sits down with TMI's Eleanor Hill to consider the ways in which treasury might be impacted by embedded finance. In this podcast, Aman explains the differences between embedded finance and BaaS, shares his hopes for the future in this space, and provides...


Audio TMI - A Modern, Agile, and Efficient Machine

UniCredit's Raphael Barisaac and Massimo Ortino explain how the fir...

What’s on the Horizon for Short-term Investments?

The treasury community has risen to the ongoing challenge of rising interest rates and inflation, with corporate cash serving as the sought-after safety net. Here, Daniel Farrell (Northern Trust Asset Management) and Karl Adams (ICD) consider how the latest MMF reform proposals affect short-term...


Transitioning a Corporate from LIBOR to CME Term SOFR

The loans market has predominantly moved to forward looking term rates, and both corporate borrowers and global lenders are increasingly turning to CME Term SOFR as the forward looking risk-free benchmarks to support their activities. Listen to this podcast, featuring Gavin Lee, Marco Bianchi (CME...


HSBC’s Sibos Spotlight – View from Sibos

TMI's Eleanor Hill invites Neil Atkinson, Nadine Lagarmitte, and Vinay Mendonca (HSBC) to discuss the critical treasury topics and conversations highlighted at this year's Sibos conference in Amsterdam. Amongst a wealth of market insights, our guests consider the most critical developments emerging from...


ECB’s Targeted TLTRO Tweaks Set to Drain Excess Market Liquidity

Welcome to the latest edition of Liquidity Link Live, your exclusive market analysis provided by Northern Trust Asset Management, one of the world’s largest cash managers. Tune in each month to discover the very latest insights on the UK, Eurozone and US markets. This edition was recorded on the 7th...


Asian Treasury Trends: Learnings and Opportunities

Former corporate treasury professional, Valerie Heng (Deloitte) joins Eleanor Hill to discuss the hot topic of treasury transformation, alongside other key shifts treasurers should be aware of. In this podcast, Valerie uses her knowledge of the Asian Treasury market to explain how the role of the...


Collaborative Trade Finance: How to Unlock Liquidity at Speed

Imagine if trade finance applications were fully collaborative and corporates could communicate with every trade participant via an open digital hub.  In this podcast, Vincent Almering (Interfood Holding B.V.) and Enno-Burghard Weitzel (Surecomp) explain to TMI's Ben Poole how collaborative trade...