IMMFA brings money market best practices to Asia
Europe-based Institutional Money Market Fund Association (IMMFA) is launching an Asia sub-committee to bring best practices to the region's money market funds.
The sub-committee, IMMFA's first outside Europe, will focus on investor education and will initially target Asian investors in EU-domiciled money market funds denominated in US dollars, euro or sterling.
"IMMFA felt the need to set up a sub-committee because of the growing interest in money market funds coupled with a lack of education about what these funds are in Asia," says Jennifer Wong, vice-chair of the IMMFA Asia sub-committee and head of liquidity sales and business development at HSBC Global Asset Management.
Education will be conducted through organising and participating in conferences and events in order to create greater awareness of money market funds. The sub-committee will also collaborate with government and regulatory bodies.
IMMFA-style funds abide by the organisation's extensive code of practice. The code lays out guidelines that member money market funds abide by, including maintaining a constant triple-A rating, accumulating net asset value and being domiciled in the EU.
"The code has become established as a best practice for the industry internationally," says Travis Spence, a member of the IMMFA Asia sub-committee and head of global liquidity at JP Morgan Asset Management Asia.
Wong adds: "All IMMFA members agree preservation of principal and liquidity in the funds is of utmost importance".
IMMFA opted to launch its Asia sub-committee now, just eight months after the collapse of Lehman Brothers and the subsequent breaking of the buck, because Asian investors now account for most of the new activity into international funds
"The culmination of events over the last 18 months [and] the challenges treasurers and investors have in managing cash, have made it important for them to seek other alternatives," says Spence. "Money market funds always fit into a space of diversification, risk management, liquidity and yield and that's how the IMMFA funds are designed as well."
The organisation currently has no plans to expand to any other regions.
Initial sub-committee members include: Barclays Global Investors, Blackrock, BNY Mellon Asset Management International, Goldman Sachs Asset Management International, Henderson Global Investors, HSBC Global Asset Management, Invesco Aim, JP Morgan Asset Management, Morgan Stanley Investment Management, Northern Trust Global Investments, State Street Global Advisors and Western Asset Management.
Notably lacking from the sub-committee membership are local asset management firms.
"The initial objective is to create greater awareness of both money market funds and the role of IMMFA in member funds that are used today by Asian investors," says Spence. "We start by focusing our attention on key markets with a greater concentration of investors into these Europe-domiciled IMMFA funds, such as Hong Kong and Singapore."
"Promoting the adoption of a similar code of practice for money market funds domiciled locally across Asia could be a secondary objective," he concludes.
Representatives of the sub-committee direct interested local asset managers to the organisation's website for more information.
The sub-committee is still in its nascent stages. To date, the members have only formalised a communications plan that entails monthly conference calls with the IMMFA secretariat in London. Investor education programmes will be unveiled throughout the year.