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Money Market Funds

Money market funds are designed to maintain daily liquidity and should 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. The funds are therefore likely to be of most use for those investors with a significant amount of capital, specifically above the £50,000 covered under the Financial Services Compensation Scheme (FSCS).

Some money market 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 secure capital first before seeking a higher yield.

Money Market Funds Gross Yield As of: Yield Net of Fees Dealing/Notice Net Lower rate (20%) tax Net Higher rate (40%) tax
Goldmans Sterling Liquidity 0.59% 19/02/2016 0.44% 42 days Daily Discretionary Only 0.35% 0.26%
Goldmans USD Liquidity 0.50% 19/02/2016 0.35% 49 days Daily Discretionary Only 0.28% 0.21%
JPM Sterling Liquidity Inst 0.57% 19/02/2016 0.37% 47 days Daily Discretionary & MAP 0.30% 0.22%
JPM Sterling Liquidity A 0.58% 19/02/2016 0.03% 48 days Daily CoFunds 0.02% 0.02%
BlackRock Institutional Cash Series 0.59% 19/02/2016 0.39% 47 days Daily Discretionary & MAP 0.31% 0.23%

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