Swiss investors moving from banks to funds

Swiss-registered investors redirected their capital flows from banks to money market funds during February, new foreign currency research suggests.

According to a report by Lipper, total cash inflows constituted 4.6 billion Swiss francs (£2.75 billion), which helped money market funds to become the second biggest form of assets after bonds.

The biggest inflow into a single fund was experienced at Zuercher Kantonalbank's gold-backed exchange-traded fund.

Equally, asset managers Pictet reported a major inflow last month as investors injected around 2.7 billion francs in foreign currency into the financial institution.

Otto Kober, Lipper head of research, told Reuters that investors are drawing money out of the banks and instead directing those amounts into money market funds.

"Since money market assets are segregated, investors are transferring funds as security against bank defaults," he explained.

"Last year we could see a transfer from bonds to money markets. This year, new money is going directly into money markets."

The Investment Company Institute said last week that total money market mutual fund assets climbed by $461 million (£328 million) to reach $3.906 trillion for the week.