JP Morgan closes 5 euro-denominated funds on ECB rate cut

JP Morgan has announced the decision to close five of its European money-market funds to new investments, following the decision of the European Central Bank to
cut the central bank’s main policy rate by a quarter of a percentage to 0.75% and its deposit rate to zero.

The funds affected are: JPMorgan’s Euro Liquidity Fund, Euro Government Liquidity Fund, Euro Money Market Fund, Euro Liquid Market Fund and JPMorgan Series II Funds — EUR.

In a notice to its shareholders, the bank said it won’t accept new investors or money in the selected euro-denominated money market and liquidity funds because the rate cut might generate negative returns for investors.

Commenting on the ECB policy decision, Cosimo Marasciulo, head of European government bonds and FX at Pioneer Investments said that the post-EU summit relief mode could help to see the positive side in the global mobilization of central banks, with China’s rate cut and the Bank of England’s decision to further injection of funds announced within less than an hour afterthe ECB move.

“Investors are urged to take risk on and we agree in principle with this message so we confirm our search for yields in larger EMU peripheral countries (Italy, Spain) at the expense of unattractively priced core bonds. At the same time, this mobilization suggests that there are still many uncertainties around us and we are ready to play tactically any bout of risk aversion,” he said.

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