Cash In on Money Market Funds

MONEY MARKET FUNDS are an efficient choice for those seeking low-risk, better-than-savings-account returns in a falling rate regime.

- SAIKAT NEOGI

These offer accrual income and capital gains and are more rewarding than savings accounts or short-term fixed deposits.

Market market funds invest in high-quality, short-duration instruments like treasury bills, commercial papers, and certificates of deposit, many of which are now yielding upwards of 7%. In contrast, traditional savings accounts are offering around 3%.

These funds offer T+1 liquidity, making them a better option than locking money in a fixed deposit, especially in the current falling rate environment. These do not lock the investor's money and offer greater flexibility without sacrificing return, making them a more efficient tool for short-term parking of funds.

In a falling interest rate environment, while fresh fixed deposit rates get reset lower quickly, money market funds benefit from holding short-term instruments acquired before the rate cuts, allowing them to offer yields that are often higher than both new fixed deposits and savings accounts.