Money Market Funds (MMFs) have remained a reliable safe haven for investors despite a recent decline in interest rates across most financial instruments.
The money market, which involves trading in short-term debt investments such as treasury bills, commercial papers, certificates of deposit, and money market mutual funds, continues to offer competitive returns even as overall market rates soften.
Despite recent drops in yields, several money market funds are still delivering year-to-date (YTD) returns exceeding 20 percent, making them an attractive option for investors seeking stable returns.
For instance, Anchoria Money Market Fund recorded a slight dip in yield by 0.21 percent between February 28 and March 7. However, its YTD return remained strong at 23.18 percent. Similarly, the AIICO Money Market Fund saw a 1.5 percent decline during the same period but maintained a healthy YTD return of 22.19 percent.
Zedcrest Money Market Fund reported a YTD return of 24.69 percent, with a net asset value (NAV) of N4.2 billion. The fund, which requires a minimum subscription of N1,000, provides investors with income in the form of dividends paid monthly or quarterly.
The Chapel Hill Denham Money Market Fund delivered a YTD return of 23.65 percent as of March 7, supported by a NAV of N15.92 billion. The fund requires a minimum investment of N5,000 with additional contributions in multiples of N1,000.
The Norrenberger Money Market Fund returned 23.21 percent YTD as of March 7, with a NAV of N15.82 billion. The fund is regarded as a low-risk option, suitable for investors with cash in their savings or current accounts seeking higher, tax-free returns.
Meristem Money Market Fund offered a YTD return of 22.97 percent with an asset allocation comprising 52.9 percent in T-bills, 35.3 percent in deposits, 11.2 percent in commercial papers, and 0.6 percent in cash. The fund’s NAV stood at N10,000, and it provides steady income through short-term, high-quality naira-denominated instruments.
The ARM Money Market Fund yielded 22.80 percent as of March 7, with a NAV of N15.3 billion. Likewise, the Coral Money Market Fund returned 22.61 percent to investors, supported by a NAV of N46.2 billion.
The Cordros Money Market Fund posted a YTD return of 22.45 percent with a NAV of N19.05 billion, investing in low-risk, short-term securities such as bankers’ acceptances, certificates of deposit, and commercial papers.
The FBN Money Market Fund returned 22.37 percent YTD, investing in a diversified portfolio of high-quality short-term instruments, including treasury bills and commercial papers. The fund requires a minimum investment of N5,000 with distributions paid quarterly.
The Emerging Africa Money Market Fund yielded 22.26 percent, with a NAV of N2.12 billion, investing in Nigerian treasury bills, Federal Government promissory notes, and other money market instruments.
EDC Money Market Fund Class A recorded a return of 22.22 percent with a NAV of N4.2 billion. The fund targets retail investors, investing in a portfolio of short-term money market securities and short-duration government instruments.
Analysts attribute the decline in yields to a drop in the inflation rate, which fell to 24.48 percent in January and further to 23.18 percent in February. Treasury bill (T-bill) yields, which had been falling since November 2024, saw a modest rebound in the most recent auction due to poor liquidity. The one-year T-bill yield dropped from 30.77 percent in November 2024 to 22.52 percent at the latest auction.
Despite the decline, analysts maintain that money market funds remain attractive. “Money market funds are still returning upwards of 20 percent. Don’t keep your soldiers idle. They should be working for you 24/7,” said Stephen Fidelis, a Lagos-based fund manager.
According to analysts at MoneyAfrica, investors can use money market funds to safeguard emergency funds and generate higher returns compared to traditional savings accounts. “Money market funds are a lucrative way of investing in treasury bills,” they noted.
Money market funds are mutual funds that pool resources from various investors to invest in short-term, high-quality debt instruments. Returns on these funds are influenced by overall market conditions and are typically paid quarterly.
With positive real returns exceeding 20 percent, money market funds remain an attractive option for investors seeking stability and liquidity amid fluctuating interest rates.
