Due to new legislation for money market funds stricter rules will apply to all FundShare Cash Funds. In addition, the fund manager has decided for several of the Cash Funds to qualify as ‘qualified money market funds’. This will be the case for example for the FundShare EUR Cash Funds, the FundShare USD Cash Fund, and the FundShare GBP Cash Fund. The strictest and safest investment policy will apply to these funds. This means that the duration of the loans in which these funds invest will become shorter and the credit ratings of the loans higher.
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). Hence, at DEGIRO you do not hold money. For every currency available in the Webtrader, a separate money market fund is available. 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. An additional advantage to the low risk, is that your Cash 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 euros are currently being held in money market funds in Europe. (Source)
DEGIRO was originally founded as broker for institutional investors that demand a high degree of security. The structure of DEGIRO, including the money market funds, has been set up to comply with these requirements and has remained unchanged since its founding. Retail investors make use of the same structure wherein financial instruments, including money market fund participation, are strictly segregated from the assets of DEGIRO. This is done by placing the financial instruments of clients in separate custodian entities. In the case of the Cash Fund participations these are even directly held in your own name. Assets of clients are as such not exposed to the company risks of DEGIRO. Therefore, in contrast to banks no deposit guarantee scheme is necessary to protect investors against a bankruptcy of its service provider.
"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, the risk is very low. According to the key investor information document of the fund, a 1 on a scale of 1 to 7.
For more information on risks and the risk indicator as determined by the manager, we refer you to the information documents prepared by the manager: the prospectus and the key investor information (KIID).
|Qualified money market funds||Position report||Key investor information document(KIID)||Prospectus|
|Money market fund|
Costs and return of the FundShare money market fund
At the moment, the market interest rate for short-term euro loans 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 qualified 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 Cash Fund has no entry and exit costs.
Below is a general overview of the situation per money market fund on the 27th of march 2018;
|Qualified Money Market Fund||Current Interest||Compensation|
|Money Market Fund|
Please note: 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 small.
New European law and regulations require financial service providers to be more transparent. DEGIRO is happy to cooperate with this. That is why we have adjusted the way in which you see your participations in the Cash Fund in the WebTrader. This allows you to view the value of your participation in comparison to the previous day.
The FundShare money market fund is a sub-fund under the Fundshare (UCITS) Umbrella Fund structure. The money market fund is registered with, and is supervised by, the Netherlands Authority for the Financial Markets (AFM). For additional information you can download the key investor information document or the prospectus here.