Damian Tan, Investment Director at Aspire, shares an overview of what you should look at when evaluating money market funds.

A money market fund (MMF) is a low-risk, highly liquid unit trust (mutual fund) that invests in short-term, high-quality debt instruments. These funds serve as a safe, flexible cash management tool for businesses to earn better returns than traditional savings accounts

There are many money market funds in the market, and while they all look similar on the surface, looking under the hood will present more information that corporate treasurers should look into when evaluating money market funds to suit their needs.

For corporate treasurers, selecting a money market fund (MMF) is fundamentally about protecting principal, ensuring liquidity, and optimizing risk-adjusted returns—in that order. Here are the key considerations, distilled into how treasury teams actually make decisions:

1. Capital Preservation (Non-negotiable)

The primary role of an MMF is capital preservation and as stewards of corporate funds, this is non-negotiable for corporate treasurers.

What to assess:

• Credit quality of underlying assets
  
• Look at the Fund’s exposure to:
  

• Government securities (lowest risk)
  
• Bank deposits
  
• Corporate issuers
  

• Historical NAV stability (any past volatility?)
  

👉 A higher yield often signals higher credit or duration risk—which may not be appropriate for core treasury cash. Very often one has to look into the underlying assets, some MMFs invest purely in fixed deposits and treasury bills while some do invest in corporate bonds which carry higher credit risks and therefore subject the fund to potentially higher volatility. At Aspire, our carefully selected fund for Aspire Yield invests only in treasury bills and fixed deposits with approved banks, which are subject to minimum short term credit rating.

2. Liquidity Profile (Match to cash needs)

Treasurers must ensure cash is available when needed.

Key factors:

• Settlement cycle (T+0, T+1)
  
• Redemption terms (lookout for any gating of redemption in the prospectus)
  
• Daily and weekly liquidity buffers
  

Typical best practice:

• Use same-day or T+1 liquidity funds for operating cash. To reduce the possibility of redemption gating, look for funds that have larger fund sizes as these funds are likely to have a larger pool of both retail and institutional investors. In addition, a MMF with larger fund size will be able to accommodate larger withdrawals without needing to impose any redemption gate.
  

3. Portfolio Composition & Transparency

Not all MMFs are equal—even if they look similar.

Corporate treasurers should review:

• Breakdown of holdings:
  

• % in deposits vs securities
  
• % in corporate vs sovereign
  

• Top issuers (concentration risk)
  
• Geographic exposure
  

👉 Typically for corporate treasury liquidity funds, one should look into funds that have higher treasuries and fixed deposits as underlying as compared to funds with corporate credit exposure as this tends to be cleaner and more treasury-friendly than funds reaching for yield through broader credit exposure. This is one key reason why Aspire Yield chooses Fullerton Cash Funds, as these funds do not have any corporate credit exposures.

4. Duration & Interest Rate Risk

While sensitivity to interest rates is typically low, MMFs nevertheless still carry some sensitivity to interest rate movements.

Key metrics:

• Weighted Average Maturity (WAM)
  
• Weighted Average Life (WAL)
  

Implications:

• Shorter duration → more stable NAV
  
• Longer duration → slightly higher yield but more fluctuation
  

5. Yield (but always risk-adjusted)

It seems counterintuitive but for corporate funds, Yield should be evaluated last, not first.

What to compare:

• Net yield (after fees)
  
• Yield consistency (not just headline rate)
  
• Source of yield:
  

• Credit risk?
  
• Duration positioning?
  

⚠️ MMFs are not guaranteed—unlike fixed deposits. As such, it is more common for corporate treasurers to select a money market fund that has the lowest credit risk and a shorter duration profile, although such funds tend to have lower yield.

6. Regulatory Structure and Safeguards

In Singapore, money market funds are specifically governed under Appendix 3 of the MAS Code on Collective Investment Schemes, which prescribes strict requirements on credit quality, maturity, diversification, and permissible instruments. This regulatory framework ensures that MAS-compliant MMFs are structured with capital preservation and liquidity as primary objectives.

For MMFs, underlying Instruments must meet minimum short-term rating thresholds, typically:

• At least F2 (Fitch) or
  
• A2 (S&P) (or equivalent)
  

This reinforces that MMFs registered in Singapore are designed around high credit quality

7. Fund Manager Strength & Track Record

Institutional-quality management is critical.

Corporate treasurers should assess fund managers on the following metrics:

• Experience managing liquidity funds
  
• Credit research capabilities
  
• Assets under management (AUM)
  
• Performance during stress periods
  

👉 Larger, established managers tend to have:

• Better issuer access and ability to negotiate better terms with bank deposits institutions
  
• Stronger risk controls
  

Since its inception in 2009, Fullerton Cash fund has a long performance and operational history across different cycles such as low rate environment, rate hike cycles and COVID liquidity periods.

8. Operational Fit

Very often overlooked by corporate treasurers, a fund must integrate smoothly into treasury operations.

Consider:

• Cut-off times for subscriptions/redemptions
  
• Ease of execution (platform, bank integration)
  
• Reporting (daily NAV, statements)
  
• Minimum investment size
  

👉 For corporates, operational friction can outweigh small yield gains. Aspire Yield integrates into the Aspire app and with minimum investment from $1, it gives corporate treasurers the flexibility and operational convenience when managing corporate treasury funds.

Simple Decision Framework

At Aspire, we suggest corporate treasurers to frame their evaluation process with these 4 questions.

• Is my principal safe? (credit quality, structure)
  
• Can I access my cash when needed? (liquidity)
  
• Does it fit operationally? (execution, reporting)
  
• What is the risk-adjusted yield?
  

Bottom Line

The “best” MMF for corporates is not the one with the highest yield—it’s the one that:

• Matches your liquidity needs
  
• Preserves capital with high certainty
  
• Integrates seamlessly into your treasury workflow