Money market funds

How come the value is dropping?
I thought they were directly linked to bank rates?
We put all our Sipp cash into the RL short term MMF to try and protect it a bit from inflation and now it’s dropped by over 1%?   
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  • dunstonh
    dunstonh Posts: 115,720
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    How come the value is dropping?
    The fund went XD and the unit price goes back to around 97p before it starts its next 6 month cycle to the next XD.





    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • ColdIron
    ColdIron Posts: 8,682
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    Was it the Income class? It went ex dividend on November 1st and you will receive a payment
  • If I sold after the ex-dividend date, and transferred the S&S ISA to a different platform, what happens when the dividend is paid? 
  • wmb194
    wmb194 Posts: 3,126
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    edited 11 November 2023 at 3:47PM
    If I sold after the ex-dividend date, and transferred the S&S ISA to a different platform, what happens when the dividend is paid? 
    It should eventually follow you to the new platform. Many will leave your account open for a few months to capture outstanding dividend and interest payments, transfer the final balance and then close the account.
  • SVaz said:
    How come the value is dropping?
    I thought they were directly linked to bank rates?
    We put all our Sipp cash into the RL short term MMF to try and protect it a bit from inflation and now it’s dropped by over 1%?   
    A popular piece of info given on here and elsewhere : don't invest in something you don't understand.  I now follow that mantra after several disappointing ,self inflected forays! ie Research and ask questions  before investing. Regards 
  • SVaz said:
    How come the value is dropping?
    I thought they were directly linked to bank rates?
    We put all our Sipp cash into the RL short term MMF to try and protect it a bit from inflation and now it’s dropped by over 1%?   
    The value drops when it goes ex dividend, because you will be paid the dividend on it. If you invest in the Acc version the dividend stays within the fund and it doesnt drop.
  • SVaz
    SVaz Posts: 232
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    Ahh right.  Mine is income, Wife’s is acc.  
  • ColdIron
    ColdIron Posts: 8,682
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    Your payment should be 31st December
  • Hoenir
    Hoenir Posts: 1,270
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    SVaz said:

    I thought they were directly linked to bank rates?

    A common misconception is that these funds place 100% cash on deposit. Always worth reading the fund factsheet at a bare minimum to gain an overview of what you money is being invested in.  They don't always outperform pure Cash Funds on a rolling 12 month period basis. 
  • I've done some research on these MMFs.

    I found with one big name provider in a DC pension, the MMF units roll up a little bit every day ,Tuesday to Friday evening times, nothing occurs Saturday or Sunday and then it rolls up the equivalent of 3 days on the Monday evening. 

    However on another big name provider these/there MMF units in a GIA tend to rise like the above and then on the 1st day if the next month, the overall value goes down an amount as the unit re-datums to £1.00 I think and then the £1.00 rolls up and about the 8th or 9th of the month, the drop of X £s which occurred on the 1st day gets paid as a dividend in to the cash bucket of the GIA. 

    So both the MMF units I know don't appear to pay interest and potentially could be taxable for savings interest over the personal limits.

    All very strange to me as think I read on hear MMF increases are interest, but it appears the unit price just keeps rolling up on one and the other one keeps paying a dividend every month. 

    I suspect none of these MMF units attract potentially taxable income and so HMRC do not get as such advised I hope.

    I've probably got it all wrong on the potentially taxable uplifts not paying potentially interest tax maybe, I'm sure a poster will put me in the picture and if I should expect an HMRC extra tax bill next year?

    Cheers in advance, Roger. 
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