Martin Spieler: Money market funds are a good way to invest money in the short term. To what extent are such funds suitable for private investors?
Iwan Deplazes: With the turnaround in interest rates, we all had to get used to the fact that money has a value and earns interest again. As a result, investment forms for short-term investments have also become interesting again. Money market funds are worthwhile for private investors with a freely available amount of around CHF 10,000 or more. You should take a good look at the topic and compare the offers.
How do money market funds work?
In principle, money market funds are collective vehicles in which investors can invest. Investment professionals then invest these assets in liquid securities - such as government and corporate bonds with short maturities and fixed-term deposits, among others.
Money market funds can be sold at any time and offer a return at the same time. How high is this currently?
Flexibility and returns are often in conflict. However, investors are currently in the fortunate position of being able to achieve an average return of a good 1% with money market funds. At the same time, they can withdraw their assets at short notice at any time.
Private investors can also use fixed-term deposits instead of money market funds. In your opinion, what are the advantages and disadvantages of fixed-term deposits compared to money market funds?
The advantages certainly lie in the fact that fixed-term deposits are not subject to a custody fee. They are also not affected by fluctuations in value. However, the disadvantages are obvious: the minimum investment amount of CHF 100,000 is clearly too high for many private investors. We also find that the interest rate is lower and the funds are blocked for a longer period of time.
What about the security of money market funds?
Money market funds are investments that are made on the capital market and can therefore vary slightly in value. Nevertheless, they are subject to much less fluctuation than equity and bond funds, for example.
Money market funds are not only available in Swiss francs, but also in euros or dollars, for example. How can private investors invest in such products?
In principle, it is certainly worth looking at a potential investment with your bank advisor or comparing offers on the Internet. You should rely on an established partner who has been active in the money market fund business for a long time. And last but not least: Money market funds in foreign currencies currently yield higher interest rates than money market funds in Swiss francs - but I would warn against currency risks here.
This interview (in Swiss German) was first broadcast in a slightly modified form in the "Geld" programme on Tele 1, Tele M1 and TVO on 23 August 2024.
