BlackRock has revealed that the BlackRock ICS Euro Government Liquidity Fund (L-ILG) has exceeded EUR1.8 billion in AUM, representing +792 per cent one year growth.
BlackRock writes: “We believe that rising interest rates amid high inflation, geopolitical uncertainty, and another last minute resolution to the US debt ceiling stand-off has left many investors sitting on higher levels of cash than this time last year. Broader market volatility has prompted many investors to press pause, positioning themselves defensively with elevated liquidity.”
The BlackRock Investment Institute anticipates major central banks will maintain a “higher for longer” stance on interest rates in their 2024 outlook. Andrew Alabaster, Head of Sales for UK, Ireland and Middle East for Cash Management at BlackRock says: “With EUR interest rates back in positive territory and providing a competitive return again, we’ve seen a significant renewed demand. The fund seeks to minimise volatility and provide liquidity, it is exposed solely to core European sovereign debt so it is proving an exciting option for clients’ cash management, collateral and regulatory capital needs – especially now income is back on the table.”
Matt Clay, Head of International Portfolio Management for Cash Management at BlackRock, says: “Having seen the importance that clients placed on the fund through the Eurozone sovereign debt crisis of 2010/11, BlackRock Cash Management was steadfast in our maintenance of this strategy throughout subsequent market cycles. 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.”
The fund’s average AUM between January 2018 and December 2022 was <EUR100 million. It’s now over EUR1.8 billion representing +792 per cent one year growth.
The net yield of the fund first went positive in Sep-22 and is now at 3.81 per cent.
BlackRock writes that it has tripled the number of counterparties to manage overnight liquidity, and underlying exposure is entirely to the highest quality European sovereign collateral and cash.