In the face of Nigeria’s high inflation, money market mutual funds have continued to attract investor interest with competitive returns.
According to the Securities and Exchange Commission (SEC) valuation reports, the average year-to-date (YtD) yield for the 38 funds stood at 20.58% as of January 24, 2025, with an aggregate Net Asset Value (NAV) of N1.887 trillion.
Notably, 28 of these funds recorded yields above 20%. This marks a significant improvement from the 9.73% YtD yield recorded in the same period last year.
This performance also compares favorably to the 2024 full-year average YtD yield of 21.34%, reinforcing the appeal of these funds.
What are money market mutual funds?
Money market mutual funds are low-risk investment vehicles that pool funds from multiple investors to invest in short-term, high-quality financial instruments. These typically include:
- Treasury bills
- Commercial papers
- Fixed deposits
- Other money market instruments
The goal is to provide investors with liquidity, safety, and competitive yields, making them an attractive option, especially in uncertain economic conditions.
However, despite the strong yields, money market mutual funds still lag Nigeria’s December 2024 inflation rate of 34.80%, signaling the persistent challenge of real returns in an inflationary environment.
As investors seek capital preservation and competitive yields, certain funds have outperformed their peers, making them ones to watch in the coming months.
Here are the top performers.
EDC Money Market Fund Class B +24.98% Yield YtD
EDC Money Market Fund Class B takes the lead with a 24.98% YtD yield, outperforming the industry average.
However, its relatively small NAV of N1.967 billion (0.11% of total NAV) and just 9 unitholders raise concerns about liquidity and investor concentration risks.
The high yield suggests an aggressive investment strategy, but the fund’s scalability and ability to sustain this performance remain questionable.
CardinalStone Money Market Fund +24.58%
CardinalStone’s Money Market Fund is another strong performer, offering a 24.58% YtD yield, an increase from its 2024 full-year yield of 22.19%.
With a NAV of N2.375 billion and 312 unitholders, the fund demonstrates better diversification and liquidity compared to EDC Class B.
However, it remains a mid-sized player and faces competition from larger, more stable funds in the market.
The fund is managed by CardinalStone Asset Management Limited.
Meristem Money Market Fund +24.24%
Meristem’s fund offered a 24.24% YtD yield, an increase from its 11.94% yield in January 2024.
More importantly, it boasts a strong NAV of N20.961 billion, representing 1.11% of total NAV, and is supported by 3,386 unitholders.
This size and investor base enhance its stability, making it a more reliable long-term investment option compared to smaller funds like EDC Class B and CardinalStone.
Anchoria Money Market Fund +23.95%
Anchoria Money Market Fund has also delivered a 23.95% YtD yield, up from 10.33% in January 2024.
However, with NAV of N1.358 billion and 1,829 unitholders, it remains a relatively small fund in the industry. While its yield is competitive, its asset size limits its ability to compete with larger players like Meristem and EDC Class A in terms of long-term stability and liquidity.
EDC Money Market Fund Class A +23.86%
Unlike its Class B counterpart, EDC Class A has a much stronger NAV of N32.547 billion, accounting for 1.72% of total market NAV, with 3,089 unitholders.
Despite yielding slightly less than Class B, its higher fund size and wider investor base make it a more stable and scalable investment option.
Investors looking for a balance between high yield and fund stability may find this a better choice compared to riskier, smaller funds.
Other top performers include
- First Ally Money Market Fund +23.81%
- Chapel Hill Denham Money Market Fund +23.65%
- RMBN Money Market Fund +23.30%
- FBN Money Market Fund +22.96%
- Coral Money Market Fund +22.76%
While the current high yields are attractive, their sustainability depends on key macroeconomic factors:
- Monetary policy: The Central Bank of Nigeria’s tight monetary stance has kept interest rates elevated, benefiting money market funds. If this policy continues, yields will remain competitive. However, any policy shift towards rate cuts could reduce returns.
- Inflation impact: Despite strong yields, money market funds still lag inflation, making real returns negative. If inflation continues to rise, these funds may struggle to deliver value to investors in real terms.
- Fund size and investor base: Larger funds with diverse investor bases like Stanbic IBTC Money Market Fund (NAV – N865 billion; +21.62% yield), FBN Money Market Fund (NAV – N386 billion; +22.96% yield), Zenith Money Market Fund (NAV – N61 billion; +22.66% yield), and ARM Money Market Fund (NAV – N138 billion; +21.90% yield) are better positioned for long-term stability.
- In contrast, smaller funds (like EDC Class B and Anchoria) may face liquidity challenges and greater risk exposure.
Overall, money market mutual funds remain an attractive option for investors seeking stable, short-term returns, especially amid economic uncertainty.
However, fund size, investor concentration, and market dynamics will determine which funds can sustain their high yields over time.
Investors should carefully consider fund stability, liquidity, and risk exposure before making investment decisions.
