Here’s why Money Market Fund is good despite declining rates

Despite declining inflation rates which have led to a drop in rates of most money market instruments, many analysts recommend Money Market Funds as a good buy for investors.

Currently, the Money Market Fund has an average yield of 20.36 percent.

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 Treasury Bills, Commercial Papers, Certificates of Deposits, etc.

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.

With a drop in the inflation rate to 24.48 percent in January and a further decline in February stoking a likely rate cut, yields on the money market have been dropping.

Treasury 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 to 22.52 at the most recent auction.

However, analysts have said that despite the decline many market funds still give positive real returns as most funds still perform upward of 20 percent.

“Money Market Funds are still returning upward of 20 percent; I know one doing 24 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 suggest that investors can save their emergency funds in a Money Market Fund and earn returns instead of leaving it in regular banks since it is also liquid.

They also mention that Money Market funds is a lucrative way of investing in treasury bills.

“You can buy a money market fund, which tracks the performance of treasury bills and has a low minimum entry amount of ₦5,000,” it said.

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The Money Market Fund has a net asset value of N2.21 trillion making it the largest (49.5 percent) mutual fund, followed by dollar funds according to data from the Security Exchange Commission (SEC) as of March 7.

The attractive yield on the fund has caused the Money Market fund to grow by 140 percent in the last year from N919 billion in the same period in 2024.

This growth has led it to overtake the dollar fund as the largest fund for the first time in January 2025.

Stanbic IBTC has a net asset value of N1.04 trillion, which is half of the total value of the Money Market value.

Here are some of the top-performing Mutual funds according to the latest Net Asset Value and Unit Price report by SEC ( March 7), Many of these funds can be bought for as low as N5000.

Zedcrest Money Market Fund – 24.69%

The Zedcrest Money Market Fund had a return of 24.69 percent and a net asset value of N4.2 billion.

It has a minimum subscription of N 1,000. 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 Treasury Bills, Commercial Papers, Certificates of Deposits, etc.

Chapel Hill Denham Money Market Fund-23.36%

The fund had a return of 23.65 percent, with a net asset value of N15.92 billion.

The fund has a Minimum Investment amount of N5,000 and an additional Contribution in multiples of N1,000.

The Chapel Hill Denham Money Market Fund is an actively managed open-ended mutual fund that invests in a diversified portfolio of assets that provides a steady stream of income, liquidity, and security of assets.

Norrenberger Money Market Fund-23.21%

The Norrenberger 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 at it realise March 7, the fund had a return of 23.21 percent and a net asset value of N15.82 billion.

Anchoria Money Market Fund- 23.95%

The Anchoria Money Market fund had a return of 23.95 percent as of March 7, with a minimum entrance fee of N5,000.

This fund is a low-risk, open-ended investment product that lets you invest in money market instruments such as Treasury bills, Certificates of deposit, Commercial papers, and Banker’s acceptance. Its main objectives are to provide high liquidity, capital preservation, and moderate-income.

Meristem Money Market Fund – 22.97 %

The Meristem Money Market Fund provides steady income to investors through short-term, high-quality money market instruments in Nigerian Naira while maintaining liquidity and stability of principal.

The fund performed an average of 22.97 percent in January. The fund has a minimum entrance of N10,000.

The fund asset allocation is 52.9 percent in treasury bills, 35.3 percent in deposits, 11.2 percent in commercial papers, and 0.6 percent in cash.

The fund targets capital preservation and aims to provide returns in line with interest rates of money market instruments, with a minimum required return of the average 91-day Treasury Bill yield. It is authorized by the SEC and managed at the discretion of the investment team, with earned interest distributed to unit holders.

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ARM Money Market Fund-22.80%

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 at it realise March 7, the fund had a return of 22.80 percent and a net asset value of N15.3 billion.

Coral Money Market Fund -22.61%

The Coral Money Market funded yielded a return of 22.61 percent in January with a net asset value of N46.2 billion.

This is an open-ended unit trust scheme that invests exclusively in money market instruments- instruments with maturities of less than 365 days. Investors can enjoy significantly higher returns than what is obtainable from the average savings account.

Cordros Money Market Fund- 22.45%

The Cordros MMfund had a return rate of 22.45 percent and a net asset value of N19.05 billion as of March 7.

The Fund invests in low-risk short-term money market securities such as Bankers’ Acceptances, Certificates of Deposits, Commercial Papers, Deposits (Fixed/Tenured) with eligible financial institutions, and any other instruments introduced and approved by the Central Bank of Nigeria (CBN) from time to time as permissible under SEC Rule 470.

With the Cordros Money Market Fund, you enjoy liquidity. This means you always have access to your money once you cross a 30-day holding period. Redemptions would not take more than 3 working days.

The minimum initial investment is N10,000 (100 units) while additional investments are N5000 (50 units).

FBN Money Market Fund -22.37%

The FBN Money Market Fund had a return of 22.37 percent, with a net asset value of N420.17 billion.

The fund is an open-ended mutual fund that invests in a diverse portfolio of short-term, high-quality money market instruments such as Treasury Bills, Commercial Papers, Bankers Acceptances, and Certificates of Deposit issued by rated Nigerian banks.

To invest in the FBN Money Market Fund, a minimum of N5,000 is required. Distributions are paid out to you quarterly.

STL Africa Money Market Fund-22.26%

Emerging Africa Money Market Fund yielded a return of 22.226 percent with a net asset value of N2.12 billion.

The fund invests in Nigerian Treasury Bills, Promissory Notes issued by the Federal Government of Nigeria, Bank Placements, Commercial Papers and other Money Market Instruments.

Minimum Subscription of 50 units at an offer price of N100 per unit.

Investors shall have the right to sell all or part of the units to the fund manager at the unit price with zero charges on Sale. The minimum permissible holding after the partial sale is 50 Units.

EDC Money Market Fund Class A- 22.22%

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 is invested 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.