Following the reduction of allocations to euro-zone banks by prime money-market funds in the second half of 2011, "they appear to be following a wait-and-see approach until a clearer pattern emerges in Europe," Fitch Ratings said. The funds' aggregate exposure to European banks has declined 2% on a dollar basis since the end of March, Fitch said. Overall euro-zone exposure has held steady over the past three months, but is 63% lower than at the end of May 2011, it said. The funds' secured exposure in the form of repurchase agreements hit a high in April, representing 33% of money fund exposure to European banks, which indicates the funds remain generally cautious, Fitch said.
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