Move Your Money From a Money Market Fund to a Fixed Income Fund?

This is currently one of the biggest questions in the investment streets.

Should you abandon Money Market Funds (MMFs) and move your money to the higher-yielding Fixed Income Funds (FIFs)?

My answer?

It Depends On Your Financial Goal.

Here is the truth.

Both MMFs and FIFs are Collective Investment Schemes (CIS).

Both offer:

• Professional fund management
• Diversification
• Liquidity
• Low entry barriers

The major difference lies in where they invest your money.

The Major Difference: Where They Invest Your Money

Money Market Funds (MMFs)

MMFs invest primarily in short-term financial instruments with maturities of up to 18 months, such as:

• Treasury Bills
• Commercial Papers
• Fixed Deposits
• Call Deposits

Because they invest in short-term assets, MMFs returns may fluctuate more in response to interest rate movements.

Fixed Income Funds (FIFs)

FIFs invest mainly in longer-term interest-bearing securities such as:

• Government Treasury Bonds
• Corporate Bonds
• Medium- to Long-Term Fixed-Income Securities
• A portion of Money Market instruments for liquidity management

Because they can lock into longer-term securities, FIFs often generate higher returns than MMFs

FIFs tend to offer relatively stable returns with lower volatility.

I analysed the top 7 funds in each category, and here is what I found:

FIXED INCOME FUNDS

1. Arvocap Almasi Fund — 16.87%
2. Etica Fixed Income Fund — 12.19%
3. Nabo Fixed Income Fund — 11.63%
4. Zimele Fixed Income Fund — 10.76%
5. Sanlam Fixed Income Fund — 10.46%
6. Kuza Fixed Income Fund — 9.49%
7. Madison Fixed Income Fund — 9.40%

MONEY MARKET FUNDS

1. Nabo Money Market Fund — 11.73%
2. Cytonn Money Market Fund — 10.20%
3. Etica Money Market Fund — 9.30%
4. Lofty-Corban MMF — 9.03%
5. Madison Money Market Fund — 8.93%
6. Enwealth Money Market Fund — 8.92%
7. Arvocap Money Market Fund — 8.79%

So, Which One Should You Choose?

Choose a Money Market Fund if your goal is:

• Building an Emergency Fund
• Creating Sinking Funds
• Parking idle cash
• Managing short-term cash needs
• Accumulating capital before investing elsewhere

Choose a Fixed Income Fund if your goal is:

• Growing wealth faster
• Medium- to long-term investing
• Beating inflation by a wider margin
• Generating a higher passive income

My current favourite in this category remains the Arvocap Asset Managers Almasi Fund.

That said, there is no rule that says you cannot use a Fixed Income Fund for short-term goals—

Provided you understand the underlying risks and liquidity features.

For me, the ideal strategy is simple:

Keep your Emergency Fund in an MMF.

Build long-term wealth using high-quality Fixed Income Funds.

What’s App Me BEST MMF or BEST FIF on 0703472299 and I will share my recommendations with you.

➖ Alex Mwangi | The Cent Warrior | WhatsApp 0703472299