What is an MMF?
A Money Market Fund (MMF) is a financial product designed for optimized cash management. MMFs invest exclusively in highly liquid and secure financial instruments. The term "MMF" is the industry-standard abbreviation for "Money Market Fund".
Money Market Funds provide daily deposit and withdrawal flexibility, making them the preferred choice for corporate treasurers and financial institutions managing short-term liquidity.
MMFs are subject to stringent regulations due to their systemic importance in the global financial system. In the European Union, MMFs must obtain specific authorization and undergo ongoing supervision by national regulatory bodies, such as the French Financial Markets Authority (Autorité des marchés financiers - AMF).
Parking cash in an MMF, rather than in a traditional bank account, allows you to earn returns that track the risk-free rate of the fund's base currency. Unlike term deposits, MMFs offer instant access to your funds without any notice period requirements.
The three core principles of effective cash management are:
- Capital preservation: Cash investments should avoid speculative risk;
- Liquidity optimization: Maintain immediate access to funds for new opportunities or unforeseen needs;
- Risk-free rate returns: All your cash should earn the risk-free rate - the rate at which your bank's deposits with the central bank are remunerated.
When your cash sits in a current or checking account, your bank earns the risk-free rate on your deposits beyind your back. The Spiko MMFs are built to ensure you don't miss out on these otherwise foregone returns.