Risk-free investments?

EdInvestor

Have you looked at money market funds?

http://focus.selftrade.co.uk/en/funds/finder/index.html

gataylor

EdInvestor wrote:

Have you looked at money market funds?

http://focus.selftrade.co.uk/en/funds/finder/index.html

Nope - never come across them, so thanks for pointing them out. I've a couple of questions though.

First of all, am I looking in the right place? Under S&P General Sector "(IMA) Money Market" I see funds like the following:

• Aberdeen Cash Inc
• Aberdeen RateBuster Rllver
• Baillie Gifford Cash Fund
• Baring Cash
• Credit Suisse Cash
• CS M-Mgr Cash Ptfl Inc
• [snip]

Is this right? Assuming it is, and that this article is talking about the same thing, how risky are they and how do I choose which one I want from the list of 31 funds? I read a couple of the simplified prospectuses and they contain statements like:

"The value of investments and income from them can fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested. Over time, inflation may erode the value of investments."

That doesn't sound like the kind of thing I'm after. Also, none of the fund returns looked to be over 3%. I'm hoping I'm fundamentally misunderstanding something here, so if you can point me at a place I can learn more about them I'd really appreciate it.

Thanks,

Geoff

EdInvestor

There are quite a few money market funds with over a 4% yield in the past year ( and of course rates have gone up over that period).Not all are tradeable on Selftrade, possibly the Fiedlity one might be your best bet. Check the charges, usually 0.5%.


Fund Stars Annual Yield
Baillie Gifford Cash Fund Unit Trust 4.38%
Baring Cash Unit Trust 4.16%
Credit Suisse Cash Unit Trust 4.00%
F&C Money Markets SC2 Acc OEIC 4.12%
Fidelity Cash Inc Unit Trust 4.54%
Fidelity MoneyBlder Cash I Unit Trust 4.53%
Henderson Enhncd Sterling Unit Trust 4.09%
HSBC Money Market Unit Trust 4.08%
Jupiter Cash Unit Trust 4.02%
L&G Cash Acc Unit Trust 4.30%
Lincoln Cash Unit Trust 4.22%
M&G High Interest A Inc OEIC 4.30%
Merrill Lynch Cash Inc Unit Trust 4.30%
Old Mutual UK Money Market Unit Trust 4.29%
Premier Money Market OEIC 4.37%
SG Cash Prof Acc OEIC 4.44%


I have some cash parked in the M&G fund, which fluctuates a little - plus or minus 0.4% of the capital value over the past three years, hardly worrying. The funds invest in AAA short term debt - floating rate notes, commercial paper etc. I doubt you'll find a AAA rated bank offering higher rates.

BTW people do not normally invest funds in cash if they are in a pension wrapper unless they are due to retire and don't want to risk their capital in the run-up to buying an annuity, or they believe there will be a crash in the price of shares or bonds, and have taken profits with a view to buying in later at a cheap price.Long term cash deposits are usually better saved outside the pension wrapper as better rates are achievable.