J.P. Morgan Asset Management has launched a second renminbi money market fund for investors in China. This is their second fund after the launch of their first institutional money market fund (MMF) in China in 2006, CIFM, which was a joint venture between JPMorgan Asset Management (UK) and Shanghai International Trust Co. It was the first real alternative to traditional cash management tools for prudent institutional renminbi investors in China.
This first fund now holds many RMB bn and is actively used by many China domiciled investors, including joint ventures and/or subsidiaries of global companies. It trades on a T+1 basis.
New MM fund
The new CIFM fund also uses JPMAM's short-term fixed income investment arm J.P. Morgan Global Liquidity. A key differentiating feature of the new fund is that it is the first RMB fund in China to offer institutional investors same-day liquidity for redemptions under certain requirements, i.e. T+0 redemption on settlement. However, JPMAM has made it very clear that T+0 on this fund is not guaranteed as redemption on a particular day is on a ‘first come, first served’ basis.
The initial public offering, which took place July 28-August 12 2014, raised more than 620 million RMB from over 200 institutional investors, surpassing the minimum target AUM set by the China Securities Regulatory Commission. CIFM RMB MMF's are only available to local legal entities in China.
The fund will be useful as a non-Chinese bank investment alternative for companies domiciled in China who have trapped cash. It will be particularly useful for the working capital balances, where same day access is important, but, as always, the return on same day MMF will be lower than on T+1 funds as the fund provider needs to carry higher liquidity.
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