As of end-October, MMF exposure to eurozone banks represented 17.7% of assets under management (AUM) within Fitch's sample. Compared with end-September, allocations to eurozone banks as a whole rose by 7%. MMF exposures to German and French banks rose 17% and 4% respectively during this period.

Fitch notes that MMF allocations to eurozone banks remain about 47% below end-May 2011 levels. Over the near term, Fitch does not expect a return to pre-crisis peaks. Since end-May 2011, funds have reallocated geographically, with increases in Japanese, Canadian and Nordic bank exposure, and have upped their holdings of U.S. Treasury and agency securities. Despite the U.S. debt ceiling impasse during the first half of October, MMF holdings of Treasurys increased by 6% over the course of the month.

The 15 largest MMF exposures to individual banks, as a group, comprise approximately 40% of total MMF assets, although only two of the banks are eurozone-based.

The full report 'U.S. Money Fund Exposure and European Banks: Eurozone 'Core' Rises' is available at fitchratings.com.

Additional information is available at 'fitchratings.com'.
Applicable Criteria and Related Research: U.S. Money Fund Exposure and European Banks: Eurozone “Core” Rises