Money Market Funds Stay Attractive Despite Rate Decline, Offering Strong Returns
Money market funds (MMFs) continue to be a reliable investment option, even as interest rates on most instruments have declined. These funds, which invest in short-term debt securities such as treasury bills, commercial papers, and certificates of deposits, have seen slight yield decreases but still offer relatively high returns, with some exceeding 20% year-to-date. For instance, the Anchoria Money Market Fund recorded a return of 23.18%, despite a small yield drop, while AIICO Money Market Fund also maintained a strong yield of 22.19%.
Several MMFs are providing impressive returns. The Zedcrest Money Market Fund, with a net asset value of N4.2 billion, offers a year-to-date return of 24.69%, making it an attractive option for investors. The Chapel Hill Denham Money Market Fund and Norrenberger Money Market Fund also reported returns of 23.65% and 23.21%, respectively. These funds provide dividends to investors and are considered low-risk, making them ideal for those seeking stable, short-term returns.
Despite a general decline in rates, other funds like the Meristem Money Market Fund, ARM Money Market Fund, and Coral Money Market Fund continue to offer competitive yields, with returns ranging from 22.6% to 22.97%. These funds are primarily invested in high-quality short-term debt instruments and maintain liquidity and stability for investors. The FBN Money Market Fund, with a yield of 22.37%, and the Emerging Africa Money Market Fund, yielding 22.26%, further highlight the consistent performance of money market funds in the current economic climate.
Analysts note that while inflation has led to a decrease in yields on treasury bills, with a drop from 30.77% in November 2024 to 22.52% in recent auctions, MMFs are still providing positive real returns. Experts suggest that investors looking for safe, liquid, and high-yield options should consider these funds over traditional savings accounts, as they continue to outperform with returns well above inflation rates.
source: business day