The BlackRock ICS Euro Government Liquidity Fund has exceeded €1.8 billion in assets under management, reflecting investor preference for a “defensive” approach.
According to BlackRock, rising interest rates amid high inflation, geopolitical uncertainty, and another last-minute resolution to the US debt ceiling stand-off have left many investors sitting on higher levels of cash than this time last year.
The fund’s average assets under management between January 2018 and December 2022 was <€100 million. It’s now over €1.8 billion, representing +792% one-year growth attributable to market volatility prompting investors to stay cautious with elevated liquidity.
The firm has tripled the number of counterparties for managing overnight liquidity, with underlying exposure exclusively tied to the “highest quality European sovereign collateral and cash”.
Andrew Alabaster, head of sales for UK, Ireland and Middle East for cash management at BlackRock, said: “With EUR interest rates back in positive territory and providing a competitive return again, we’ve seen a renewed demand. The fund is exposed solely to core European sovereign debt, proving an exciting option for clients’ cash management, collateral and regulatory capital needs – especially now income is back on the table.”
Despite market cycles, BlackRock Cash Management maintained its strategy, recognising its significance to clients during the Eurozone sovereign debt crisis of 2010/11. Matt Clay, head of international portfolio management for cash management at BlackRock, added: “Even as negative EUR rates hit and many providers closed their government liquidity funds, we maintained our stance that these products were of critical need in specific cycles. As macro uncertainty persists, daily liquidity funds remain a popular choice for investors looking to stay nimble.”
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