Money Market Funds
DEGIRO believes it is important that clients understand how the structure with the money market funds works. DEGIRO is not a bank but an investment firm. In the Netherlands investment firms are not allowed to hold money of clients. Therefore, when you become a client of DEGIRO, you give a standing order to invest money in money market funds (the FundShare Cash Funds). The money market funds DEGIRO has available are all qualified money market funds. For every currency available in the WebTrader, a separate money market fund is also available. The management costs of these funds are included in the fund's return. Due to the current low interest rates of some currencies, the return of the relevant money market fund is negative. A negative return, as a result of the low interest rates and management costs, will be compensated by DEGIRO until further notice.
One of the objectives of qualified money market funds is to realise a return that is equal to the market interest rate with as low risk as possible. An additional advantage to the low risk, is that your qualified money market fund participations, just like your other investments, are kept strictly separate from the assets of DEGIRO.
Money market funds are often used by institutional investors, such as pension funds, to hold large amounts of money in a safe way. Approximately 1 trillion € are currently being held in money market funds in Europe. (Source)
"The objective of the money market funds is to realise a return that is equal to the market interest rate with as low a risk as possible."
The FundShare money market fund's main objective is to minimize risk. With the strict investment policy, this risk is very low. According to the Key Investor Information Document of the fund, this risk level is a 1 on a scale of 1 to 7.
For more information on the risks and the risk indicator as determined by the fund manager, we refer you to the information documents prepared by the fund manager: the prospectus and the Key Investor Information Document (KIID).
Costs and return of the FundShare money market fund
At the moment, the market interest rate for short-term EUR bonds with a low risk are negative. As a result, the EUR Cash Fund currently achieves a negative result.
Annually an amount of 0.09% of the fund's assets are charged as management costs for the qualifying money market funds. These costs are included in the fund return.
Although any positive return on your investment is yours, a negative return as a result of the current interest and fund costs is currently compensated by DEGIRO on a non-committal basis. Click here for more information. The qualified money market funds available at DEGIRO have no entry and exit costs.
Below is a general overview of the situation per money market fund as of the end of September 2018;
|Qualifying Money Market Fund||Current Interest||Compensation|
|Money Market Fund|
Please note: the compensation given by DEGIRO is on a non-committal basis. DEGIRO is not obliged to do so and can change or end the compensation on any moment. Of course we will always communicate such changes to you. The compensation only applies to negative returns as a result of negative interest and management costs. Loss suffered on an investment made by the fund will not be compensated by DEGIRO. This risk is low.