Money market funds (MMFs) remain viable safe havens for investors despite drops in interest rates of most instruments.
Money market refers to trading in short-term debt investments, according to Investopedia. They include trading in treasury bills, commercial papers, money market mutual funds, certificates of deposits, among others.
Most money market yields have seen slight declines in recent times, but they are still relatively high – with some exceeding year-to-date returns of 20 percent.
For instance, while Anchoria Money Market Fund’s yield dropped by 0.21 percent between February 28 and March 7, its year-to-date return stood at 23.18 percent.
This is the same for AIICO Money Market Fund, whose yield fell by 1.5 percent between the last week of February and March 7 but still stood at 22.19 percent.
Money market funds’ high yields
Several money market funds are producing high returns on investment despite rate declines.
The Zedcrest Money Market Fund had a year-to-date return of 24.69 percent and a net asset value of N4.2 billion.
It has a minimum subscription of N1,000. Investors in Zedcrest MMFs earn income in the form of dividends, which are usually paid out monthly or quarterly.
The Zedcrest Money Market Fund is a mutual fund that invests in short-term high-quality debt instruments such as T-bills, commercial papers, certificates of deposits, among others.
Similarly, the Chapel Hill Denham Money Market Fund returned 23.65 percent between the beginning of 2025 and March 7. It had a net asset value of N15.92 billion as of March 7, with a minimum investment of N5,000 and an additional contribution in multiples of N1,000.
Also, the Norrenberger Money Market Fund-returned 23.21 percent to investors from January to March 7. It is a low–risk fund suitable for investors who have cash in their current and savings accounts and wish to earn higher tax-free returns. It had a net asset value of N15.82 billion as of March 7.
More so, the Meristem Money Market Fund had a return on investment of 22.97 percent, providing steady income to investors through short-term, high-quality money market instruments in the naira, while maintaining liquidity and stability of principal.
The fund performed at an average of 22.97 percent on March 7, with a minimum entrance of N10,000 investment.
The fund asset allocation was 52.9 percent in T-bills, 35.3 percent in deposits, 11.2 percent in commercial papers, and 0.6 percent in cash.
The ARM Money Market Fund returned 22.80 percent as of March 7.The ARM Money Market Fund is a low–risk fund suitable for investors who have cash in their current and savings accounts and wish to earn higher tax-free returns.
As of March 7, the fund had a net asset value of N15.3 billion.
Moreover, the Coral Money Market Fund returned 22.61 percent to investors. It had a net asset value of N46.2 billion.
Analysts say with this fund, investors can enjoy significantly higher returns than what is obtainable from the average savings account.
For the Cordros Money Market Fund, yield stood at 22.45 percent as of March 7. It had a net asset value of N19.05 billion, investing in low-risk short-term money market securities such as bankers’ acceptances, certificates of deposits, commercial papers, among others.
Also, the FBN Money Market Fund returned 22.37 percent between January and March 7. It is an open-ended mutual fund that invests in a diverse portfolio of short-term, high-quality money market instruments, such as T-bills, commercial papers, among others.
To invest in the FBN Money Market Fund, a minimum of N5,000 is required. Distributions are paid out to investors quarterly.
Furthermore, the Emerging Africa Money Market Fund yielded a return of 22.26 percent, with a net asset value of N2.12 billion.
The fund invests in Nigerian T-bills, promissory notes issued by the Federal Government of Nigeria, bank placements, commercial papers and other money market instruments.
Moreover, the EDC Money Market Fund Class A had a return of 22.22 percent, with a net asset value of N4.2 billion.
The fund caters to retail investors and invests in a portfolio of short-term money market securities and short-duration government securities, including discounted instruments with rated financial institutions in Nigeria.
The minimum amount that can be invested is N5,000 and scalable in multiples of N1,000.
Mutual funds
Mutual funds are created with the intent of pooling funds from various investors who are willing to diversify their holdings. For a money market fund, the pooled funds are invested in short-term high-quality debt instruments such as T-bills, commercial papers, certificates of deposits, among others.
The return on the fund depends on general trends and the condition of the money market from time to time. Returns/interest on most money market funds are paid quarterly.
Inflation impact
With a drop in the inflation rate to 24.48 percent in January and a further decline to 23.18 percent in February, yields on the money market have been dropping.
T-bill yields, which had been falling since the second auction in November 2024, only saw an increase in the most recent auction due to poor liquidity. Yields on the one-year bill have declined from its peak of 30.77 percent in November 2024 to 22.52 at the most recent auction.
However, analysts say that despite the decline, many market funds still give positive real returns, performing upwards of 20 percent.
“Money market funds are still returning upwards of 20 percent. Don’t keep your soldiers idle. They should be working for you 24/7,” Stephen Fidelis, a Lagos-based fund manager, said.
Analysts at MoneyAfrica said that investors can save their emergency funds in money market instruments and earn returns – instead of leaving them in regular banks.
They added that “money market funds are a lucrative way of investing in treasury bills.”
