Although the interest rates of most instruments have decreased, money market funds (MMFs) remain viable safe havens for investors.
According to Investopedia, the money market is the trading of short-term debt assets. These comprise, among other things, trading in commercial papers, money market mutual funds, certificates of deposit, and treasury bills.
Despite recent minor decreases, the majority of money market yields remain high, with several surpassing 20 percent year-to-date gains.
For example, Anchoria Money Market Fund’s yield decreased by 0.21 percent between February 28 and March 7 but still returned 23.18 percent this year.
The same is true for the AIICO Money Market Fund, whose yield remained 22.19 percent after dropping by 1.5 percent during the final week of February and March 7.
High returns from money market funds
Despite declining interest rates, some money market funds are generating substantial returns on investment.
With a net asset value of N4.2 billion, the Zedcrest Money Market Fund has returned 24.69 percent this year.
A minimum subscription of N1,000 is required. Dividends, often distributed monthly or quarterly, are the source of income for investors in Zedcrest MMFs.
T-bills, commercial papers, certificates of deposit, and other short-term, high-quality debt instruments are among the investments made by the Zedcrest Money Market Fund, a mutual fund.
Likewise, from the start of 2025 to March 7, the Chapel Hill Denham Money Market Fund earned a return of 23.65 percent. With a minimum investment of N5,000 and extra contributions in multiples of N1,000, its net asset value as of March 7 was N15.92 billion.
Additionally, from January to March 7, investors received a 23.21 percent return from the Norrenberger Money Market Fund. This low-risk fund is appropriate for investors who want to increase their tax-free returns and have money in their current and savings accounts. As of March 7, its net asset worth was N15.82 billion.
Furthermore, the Meristem Money Market Fund maintained principal stability and liquidity while offering investors consistent income through short-term, premium money market instruments in the naira, with a return on investment of 22.97 percent.
On March 7, the fund’s average performance was 22.97 percent, requiring a minimum commitment of N10,000.
T-bills accounted for 52.9 percent of the fund’s assets, followed by deposits (35.3 percent), commercial papers (11.2 percent), and cash (0.6 percent).
As of March 7, the return on the ARM Money Market Fund was 22.80%. The ARM Money Market Fund is a low-risk option for investors with funds in their current and savings accounts who want to increase their tax-free earnings.
The fund’s net asset value was N15.3 billion as of March 7.
Additionally, investors received a 22.61 percent return from the Coral Money Market Fund, which had net assets of N46.2 billion.
Analysts say this fund offers investors noticeably better returns than the typical savings account.
As of March 7, the Cordros Money Market Fund’s yield was 22.45 percent. With a net asset value of N19.05 billion, it invests in short-term, low-risk money market instruments such as commercial papers, bankers’ acceptances, and certificates of deposit.
Additionally, from January to March 7, the FBN Money Market Fund yielded a 22.37 percent return.
It is an open-ended mutual fund that invests in various short-term, premium money market securities, including commercial papers and T-bills.
To invest in the FBN Money Market Fund, you need a minimum of N5,000. Investors receive quarterly distributions.
Additionally, with a net asset value of N2.12 billion, the Emerging Africa Money Market Fund returned 22.26 percent.
The fund invests in commercial papers, bank placements, Nigerian T-bills, Federal Government of Nigeria promissory notes, and other money market instruments.
Furthermore, with a net asset value of N4.2 billion, the EDC Money Market Fund Class A yielded a return of 22.22 percent.
The fund serves retail investors and invests in various short-duration government and short-term money market securities, including discounted products from reputed Nigerian financial institutions.
It is scalable in multiples of N1,000 and has a minimum investment requirement of N5,000.
Mutual funds
The purpose of mutual funds is to combine the money of different investors who wish to diversify their assets. T-bills, commercial papers, certificates of deposit, and other short-term, high-quality debt instruments are among the investments made with the pooled funds of a money market fund.
The state of the money market and general trends determine the fund’s return periodically. The majority of money market funds pay interest and returns quarterly.
Impact of inflation
Yields in the money market have been declining due to the inflation rate falling to 24.48 percent in January and then to 23.18 percent in February.
Poor liquidity was the only reason for the most recent auction’s spike in T-bill yields, which had declined since the second sale in November 2024. At the most recent auction, yields on the one-year bill were 22.52 percent, down from a peak of 30.77 percent in November 2024.
Analysts assert that despite the drop, many market funds continue to generate positive real returns, with performance reaching 20 percent.
“Money market funds continue to yield returns of 20% or more. Keep your warriors active. They should be working for you 24 hours a day, seven days a week,” said Stephen Fidelis, a fund manager from Lagos.
According to analysts at MoneyAfrica, investors can earn returns by saving money in money market instruments instead of keeping emergency cash in traditional banks.
“Money market funds are a lucrative way of investing in treasury bills,” they continued.
