Money market funds
Liquidity / Diversification / Experience
The Vanguard Sterling Short-Term Money Market Fund offers a low-cost solution for those needing somewhere to 'park' cash
It is designed so you can hold your savings rather than grow them and is invested in a highly diversified way, across multiple institutions, unlike cash held at one bank.
What is a money market fund?
A Money Market Fund ("MMF") is a fund that invests in short-term debt such as treasury bills, commercial paper and certificates of deposit. MMFs offer an important source of short-term financing for financial institutions, corporates and governments. On the demand side, they offer a short-term cash management tool generally used by corporations to invest their excess cash over a short timeframe.
Vanguard has been managing money market investments for over 35 years in regions outside the UK. We believe an MMF is a core building block for UK investors. The UK-domiciled Vanguard Sterling Short-Term Money Market Fund has a variable net asset value, which means that the share price will have a marked sensitivity to the value of the fund's assets.
The fund seeks to provide capital stability, liquidity and diversification while maximising current income. We aim to achieve this by investing in short-term money market instruments including but not limited to bank certificates of deposits, commercial papers, corporate and sovereign variable and fixed rate bonds, UK Government bills, repurchase and reverse repurchase agreements and cash deposits. Money market instruments are instruments usually issued by banks or governments that are a type of short-term loan made by the investor to the issuer. The fund will be actively managed.
How is a money market fund different from other funds?
The short dated and high quality nature of the investments in a money market fund result in a product that is characterized by stability, low risk, high credit quality and highly liquid. That can make it a good place to invest cash with short term requirements.
Why invest in a money market fund?
There are 5 traditional reasons why money markets present an enhanced offering for investors’ cash over alternative solutions:
- Capital Preservation
- Experienced Fund Management
- Competitive Yield
An investment in a money market fund is not a guaranteed investment. An investment in a money market fund is different from an investment in deposits, as the amount invested in a money market fund is capable of fluctuation. Money market funds do not rely on external support for guaranteeing the liquidity of the money market fund or stabilising the Net Asset Value per share. The risk of loss of the amount invested shall be borne by the investor.