Money Markets to See Benefits from Corporate Repatriation

According to a Bloomberg report, asset managers are expected to reap quite a cash windfall as a result of recent tax reforms. Bloomberg, citing an Invesco report on the implications of corporate repatriation on money markets, estimates that a potential $1.5 trillion will come back to the United States from corporations now subject to lower tax rates. Top asset managers with cash management businesseslike BlackRock, JPMorgan Chase and Fidelity Investments are racing to create new strategies for clients who want to bring overseas funds back, the Bloomberg report said. The Invesco report predicts a significant portion of the repatriated cash will be used for stock buybacks and mergers and acquisitions transactions but also that money market funds will see inflows. “[S]ince M&A activity is opportunistic and time-sensitive, cash returned for this purpose could produce large and short-term inflows into US government money market funds,” the Invesco report said. On its website, BlackRock claims that its cash management unit has managed cash portfolios for corporations, banks, foundations, insurance companies and public funds and that as a leader in this asset class, BlackRock has $457.1 billion in global liquidity assets across multiple currencies.