KEEP THIS IN MIND WHEN YOU CHOOSE A MONEY MARKET FUND:
QUALITY OF MANAGEMENT TEAM
It’s important to know how long an asset management team has worked with the company, as is their level of experience. Investors need to be aware that not all money market funds are the same. Some could be i nvested in government a n d corporate i nstruments as well to further diversif y ri sk, however, bank instruments carry the lowest risk. CHECK UPFRONT FEES
Compare f e e s . Al l a s s e t management funds charge a fee, but these vary.
Some a s s et management companies charge an upfront (or initial) fee. This means that if you invest R100, they may charge their upfront fee of say 0.4% (or more), which means you have a lower i nitial capital i nvestment (of R99.60) than you planned for. Weigh up fees and charges to help decide which option is best for you. CHECK THE CREDIT QUALITY
Investors need to be comfortable with the underlying assets that they are investing in. Fund fact sheets give a breakdown of top 10 holdings in funds, the return and the risk profile, and these are published on a monthly basis on the asset manager’s website. This is another advantage over money market accounts because a bank does not have to tell you where your money is i nvested. With money market funds you have full transparency.