OREANDA-NEWS. The net asset value of money market funds (MMFs) resident in Ireland at end September 2015 was €424 billion, an increase of 5 per cent, or €22 billion, since June 2015. There was a reclassification of €30 billion into the MMF population from bond funds. Net transactions flows were relatively stable in Q3, declining by just €657 million.  This followed significant investor outflows in Q2, partly related to market adjustments to interest rate expectations for the US.

Total debt securities held by MMFs in September was €330 billion (Table 1), excluding reclassifications of €25 billion MMF holdings of debt securities remained broadly stable over Q3. Discounting the reclassification, holdings in both Euro Area and United States debt securities remained broadly flat over the quarter reflecting the broadly stable yield available in both areas. There was some evidence of a flight to safety in terms of the increased debt security holdings of German issued bank debt and this was most noticeable by US dollar denominated funds. In contrast, there was a decline in holdings of Australian debt securities, most noticeable within sterling denominated funds. This reflected financial market turbulence and increasing concerns regarding the Chinese economy and perceived spill over effects for the Australian economy.

MMFs also sought to enhance returns by expanding their holdings of securities with somewhat longer residual maturities. In the United states, where the yields had moved from 0.28 to 0.33 for the 3 month US dollar money market rate, there was a €5 billion decrease in US issued residual holdings for less than 3 months. Conversely holdings with a residual maturity of between 3 to 6 months maturity increased by €12 billion during Q3 2015.  Similar activity occurred within euro area holdings while UK issued holdings remaining broadly flat. All securities with residual maturities greater than 3 months increased by 26 per cent over the period from June 2015 to September 2015 (Table 2).

Holdings of government debt amounted to €55 billion in September 2015 with United States debt accounting for 47 per cent of holdings (Chart 1).

Equity liabilities stood at €424 billion in September 2015. Equity Liabilities issued to the United Kingdom made up the largest contribution at 62 per cent (€263 billion) (Chart 2). During August 2015, there was a large reclassification causing a decrease of €12 billion from the Other Financial Intermediaries sector within the Euro Area (excluding Ireland). The majority of this amount (€7 billion) was reclassified into the UK Other Financial Intermediaries sector.