All about money market funds

Investing your money is key when it comes to reaching your financial goals. By investing in different products, you can grow your existing funds and better. One of these products is a money market fund. Here are some key things you need to know about them.

What is a money market fund in the Philippines?

A money market fund is a pooled fund in the form of a mutual fund or a Unit Investment Trust Fund (UITF) that contains cash, high-yielding time deposits, and short-term government securities. Money market funds are highly liquid, meaning they can easily be converted to cash. This makes them ideal for people who need access to their funds while preserving their capital at the same time.

How do money market funds work?

Money market funds are conservative in nature, meaning they come with low risk. While there is potential for high returns, it is not guaranteed. This is because they contain high-quality, short-term securities which vary in terms of rate of return depending on prevailing economic conditions. With a low risk level however, money market instruments can be considered relatively safe investments.

If you are interested in money market funds, you can avail of them through banks and investment companies. Metrobank, for instance, offers money market funds for as low as PHP 10,000.

Money market funds can be availed through a Unit Investment Trust Fund (UITF) offered by bank and trust entities.

There are different types of money market funds. For instance, at Metrobank, one product we offer is the Metro Short Term Fund. The Metro Short Term Fund is a medium-risk investment suited for moderate investors who want liquidity but are willing to take minimal volatility. With a minimum initial investment of only PHP 10,000, you gain access to high-yielding investments and can see gains in as early as six months.

What are the basic components of a money market fund in the Philippines?

Here are some details you need to take note of when investing in money market funds in the Philippines.

• Initial capital/investment. The minimum investment required to open a money market fund. For Metrobank, the initial investment required is PHP 10,000.

• Additional investment. The amount you can add to your investment after your initial placement. This starts at PHP 1,000 for Metrobank money market funds.

• Trust fee. This is the fee collected against the fund which covers operations, management, or administrative expenses.

• Holding period. Refers to the minimum time you should stay invested in the fund without incurring an early redemption fee.

What are the advantages of money market funds?

A money market fund is a good alternative to the typical savings account. Money market funds keep your money secure while earning returns in the short term.

They contain a degree of risk but it is very low, especially when compared to other kinds of investments. This means that the probability of your investment to incur losses is low when you need to redeem your money.

What are the downsides to a money market fund?

The returns from money market funds are not fixed and non- guaranteed as opposed to savings or time deposits. Since it is a low-risk investment, the returns are relatively low compared to other assets with more risk.

Grow your money securely with a money market fund through Metrobank's My Choice Investment. Log on to Metrobank Online or head on to https://earnest.ph/ to start investing.