Phillips MMF

It seems that Phillips Money Market Fund (MMF) is giving lousier returns as more people are aware of it, or simply because that they are fleeing the more volatile stock markets and trying to flock into the safer cash funds. I've been using it since May 2007 and I also tracked the NAV value of the fund since then.


The returns per month for the following years are as follows:

2007 : 0.167% per month --> 2.01% per yr
2008 : 0.111% per month --> 1.33% per yr
2009 : 0.087% per month --> 1.04% per yr


You can see that the returns are dropping. From the fact sheet, I also saw that it is attracting more and more people into the funds, so perhaps there is so correlation. Perhaps they are finding it harder and harder to get the yields as their fund size grew bigger, or maybe it's the fact that the general low interest rate environment makes it hard for them to give us anything more competitive (they invest in low volatility assets like sgd deposits, govt bonds etc).

Can you see the obvious change in gradient over time?

Here's the figures for this yr, 2010:

Jan : 0.071% per month
Feb : 0.088% per month
Mar : 0.053% per month
Apr : 0.044% per month
May : 0.053% per month


The average monthly returns had dropped since the start of the year, giving an average of around 0.062% per month. This means that if all else remains as it is, I'll be looking at around 0.8% per year, which is under 1% per year.


Pathetic you say? Yes, it is. But I guess that's the price of 'safety'. It can't even beat inflation, which is at 3% per year. But for those who needs the liquidity (like me) and cannot safely put it into higher yield assets, I suppose this beats the even lousier interest rates for savings accounts. I think even for fixed deposits, you need a higher deposit amount and longer lock in period for this kind of returns. So, in comparison, it is still okay lah.


One thing about it is that it is not guaranteed, unlike banks. Given the low returns for the MMF, it's been a long while since I've put in any fresh funds inside. Most of my savings are put into my savings account now, because the higher returns is not worth the risk of Phillips going belly up.