The biggest U.S. asset managers are going head-to-head to win a piece of a $1.5 trillion corporate cash comeback.
That's the sum companies are expected to bring onshore under the U.S. tax overhaul passed last year, according to Invesco estimates. About $400 billion has already been repatriated, according to the firm.
Overseas, at least one major asset manager is losing out as a result of the changes. Cisco Systems Inc. yanked €5 billion ($5.8 billion) from Deutsche Bank's asset management arm, DWS Group, in recent quarters as it repatriated profits, Bloomberg News reported on Thursday. The loss amounted to 40% of Deutsche Bank's outflows in the first half of the year.
Cisco's decision underscores the fierce competition among asset managers seeking to capitalize on President Donald Trump's successful push to upend corporate tax rates — an effort that's been criticized as a boondoggle to benefit companies already sitting on piles of cash.
The new law sets a one-time repatriation rate for untaxed cash held abroad — a 15.5% charge on cash and liquid assets, and 8% on non-cash or illiquid assets. Payments can be made over eight years. Previously, such funds were hit with the 35% corporate tax.
Halfway into the year companies are still only beginning to respond to the changes. But BlackRock, J.P. Morgan Chase and Fidelity Investments are among asset managers racing to create new strategies for clients who want to bring overseas funds back. Companies face an array of choices ranging from where to invest the money short term and how to spend it.
"They have a significant amount of cash abroad and there is this window where they can capitalize on repatriating it," said Jean-Yves Fillion, the chief executive of BNP Paribas' U.S. holding company.
BNP Paribas recently reinforced its transatlantic task force that helps international companies with capital raising and financial strategy, including managing the flow of cash held overseas back to the U.S., Mr. Fillion said.
Here's what some of the top firms are doing.