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Money market funds out of favour in China

Money_marketAsset managers operating in China have stopped promoting money market funds due to official pressure to move assets into other fund types. The official efforts are aimed at protecting consumers and minimising liquidity risks in money market funds, which account for about 60% of China’s mutual fund assets, said Cerulli Associates, a research firm. Instead of money market funds, Chinese asset managers are turning to the equity market. “Many managers are planning to launch more equity or equity-biased funds in 2018, following a bull year for blue chip stocks,” said Miao Hui, senior analyst with Cerulli who leads the China research initiative. “Favourable market sentiments, star managers, outstanding historical performance and partnerships with strong distributors will be the key success factors.” Money market fund assets will no longer be included in rankings of assets under management published by the Asset Management Association of China. One manager from a joint venture company told Cerulli Associates he was concerned the exclusion of these assets would make it hard to assess the relative performance of Chinese asset managers. Despite the official pressure against money market funds, Cerulli Associates predicts they will remain popular with investors because of attractive yields. ©2018 funds global asia

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