Money Market Funds

These funds are designed to maintain daily liquidity and always return positive growth. This growth is likely to be only marginally higher than the London Interbank Offered Rate (LIBOR) which is the rate at which banks lend to each other. This is because the instruments in which these funds invest are the same instruments that banks and large corporations use to fund their short term liquidity.

Money market funds were initially designed for professional investors with a significant amount of cash to invest. They are considered to be secure and offer daily liquidity. Therefore, these funds are most suitable for investors with a significant amount of capital that takes them above the Government guaranteed £50,000 maximum under the Financial Service Compensation Scheme.

Some funds have attempted to increase the yield by buying less liquid securities or securities with lower credit ratings. Cash funds, in our opinion, should seek to guarantee capital first before seeking a higher yield. None of the funds we have recommended have suffered falls in price.

Money Market Funds	Gross Yield	As of:	Yield Net of Fees	Dealing/Notice	Net Lower rate tax	Net Higher rate
Goldmans Sterling Liquidity	0.80%	31/01/2012	0.65%	45 days	0.52%	0.42%
JPM Sterling Liquidity Inst	0.84%	31/01/2012	0.64%	37 days	0.51%	0.41%
JPM Sterling Liquidity A	0.85%	31/01/2012	0.30%	37 days	0.24%	0.19%
Fidelity Inst Cash GBP	0.80%	31/01/2012	0.65%	45 days	0.52%	0.42%
Fidelity Inst Cash EUR	0.52%	31/01/2012	0.37%	42 days	0.30%	0.24%
Fidelity Inst Cash USD	0.32%	31/01/2012	0.17%	35 days	0.14%	0.11%
BlackRock Institutional Cash Series	0.57%	31/01/2012	0.37%	51 days	0.30%	0.24%
Insight ILF GBP Liquidity 1	0.87%	31/01/2012	0.67%	40 days	0.54%	0.43%
Insight ILF GBP Liquidity 4	0.87%	31/01/2012	0.62%	40 days	0.50%	0.40%

The value of your investments and the income from them can go down as well as up and you can get back less than you originally invested. Any yields quoted cannot be taken as a reliable indicator of future returns. Before investing in funds please check the specific risk factors on the key features document or refer to our risk warning notice as some funds can be high risk or complex. Prevailing tax rates and relief are dependent on your individual circumstances and are subject to change.

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Investment Research

Money Market Funds