The biggest U.S. asset managers are going head-to-head to win apiece of a $1.5 trillion corporate cash comeback.

That's the sum companies are expected to bring onshore under theU.S. tax overhaul passed last year, accordingto Invesco estimates. About $400 billion has already beenrepatriated, according to the firm.

Overseas, at least one major asset manager is losing out as aresult of the changes. Cisco Systems Inc. yanked 5 billion euros($5.7 billion) from Deutsche Bank AG's asset management arm, DWSGroup, in recent quarters as it repatriated profits. The lossamounted to 40 percent of Deutsche Bank's outflows in the firsthalf of the year.

Cisco's decision underscores the fierce competition among assetmanagers seeking to capitalize on President Donald Trump'ssuccessful push to upend corporate tax rates—an effort that's beencriticized as a boondoggle to benefit companies already sitting onpiles of cash.

Treasury & Risk wants to know how your company'scash management practices are responding to the new tax law.Share your insights today, and you'll receive acopy of the exclusive survey report—and a chance to win a $200 AmExgift card.

The new law sets a one-time repatriation rate for untaxed cashheld abroad—a 15.5 percent charge on cash and liquid assets, and 8percent on non-cash or illiquid assets. Payments can be made overeight years. Previously, such funds were hit with the 35 percentcorporate tax.

Halfway into the year companies are still only beginning torespond to the changes. But BlackRock Inc., JPMorgan Chase &Co., and Fidelity Investments are among asset managers racing tocreate new strategies for clients who want to bring overseas fundsback. Companies face an array of choices including where to investthe money short-term and how to spend it.

“They have a significant amount of cash abroad, and there isthis window where they can capitalize on repatriating it,” saidJean-Yves Fillion, the chief executive of BNP Paribas SA's U.S.holding company. BNP Paribas recently reinforced its transatlantictask force that helps international companies with capital raisingand financial strategy, including managing the flow of cash heldoverseas back to the U.S., Fillion said.

Here's what some other firms are doing:

|

Fidelity

Michael Morin, head of liquidity management solutions atBoston-based Fidelity, said the firm is helping clients assessalternatives as they repatriate cash to spend on projects, pay offdebt, repurchase shares, and meet dividend payments.

Fidelity is helping clients determine where to park their money,whether in government or prime market funds.

“Some of our clients have already completed those transactions,but the majority of our clients are still in the process,” Morinsaid.

The timing for the decision is key in determining what the rightinvestment vehicles are, according to Morin. Fidelity has hundredsof cash management clients, with more than $500 billion in moneymarket funds, according to a company representative.

|

BlackRock

The world's largest asset manager thinks it's in a favorableposition, having made several deals to add to its cash managementbusiness.

Last year the New York-based firm acquired Cachematrix, afinancial technology firm focused on cash management. When the dealclosed, BlackRock managed about $400 billion in cash for companies,banks, foundations, insurers, and public funds, according to arelease. In 2016, BlackRock acquired Bank of America Corp.'s $80billion money market fund business.

Ellen Bockius, BlackRock's global head of cash managementmarketing and U.S. corporate cash sales, said that investors willbe keeping a watchful eye over how companies put their tax-relatedwindfalls to work.

Bockius said observers will continue to see “shareholderinterest in what these corporations are doing with this cash,”whether that comes in share buybacks, bond repurchases, capitalinvestment, or deal-making.

|

Goldman Sachs Asset Management

Corporations that had been issuing debt in the low-interest-rateenvironment are increasingly turning around their strategies, saidGoldman Sachs Asset Management managing director Jason Granet.

In the past few years, American companies “were going to thedebt market in the U.S. while building up these huge stores of cashabroad, especially while interest rates were near zero. Now they nolonger need to issue debt,” he said.

Expect even more deal-making among cash managers, Granetadded.

“It's not surprising to see moves in our space because ofregulation and costs. I wouldn't be surprised to see more,” saidGranet. “For us, we need to invest in technology and have a broadrange of solutions to offer clients.”

|

JPMorgan Asset Management

The firm is stepping in as companies rethink their capitalstructure or how they finance their operations through differentkinds of funds, said Ted Ufferfilge, global head of clientportfolio management at JPMorgan Asset Management.

“People are trying to think through what they want their capitalstructure to look like,” with short-term bond funds in particulargarnering attention recently, he said.

But customization is necessary.

“Everyone wants to change the capital structure of theircompany, but every company is unique,” added Ufferfilge.

From: Bloomberg

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.