Coinage: Russians' investments in money funds quadrupled
Since the beginning of 2024, Russians have invested 527 billion rubles in money market funds, which is four times more than a year earlier, according to InvestFunds data. They allow investors to earn money by lending rubles to large market participants at rates close to the key rate. That is, it is analogous to a deposit, but the money can be withdrawn at any time without loss of profitability - at the same time, unlike a bank, the amount is not insured. Money market mutual funds will remain relevant throughout 2025 due to relatively low risks and high yields, as the Central Bank rate will still be double-digit. What are the pros and cons of this instrument and how it differs from the classic mutual funds - in the material "Izvestia".
Money market funds in 2024
The inflow of funds (both citizens and institutional investors) in unit investment funds (UIFs) of the money market for 11 months of 2024 amounted to 527 billion, according to data from InvestFunds (aggregator of financial market data). This is four times more than in the same period of 2023, Izvestia found out. From January to November, only individuals invested three times as much in this instrument - 410 billion rubles, according to data from Mosbirzh (available from Izvestia).
Total assets of money market funds from the beginning of the year to December 24 increased 5.5 times, up to 996 billion rubles, follows from the data of InvestFunds. Now they account for more than half of the funds of all mutual funds on the Russian market (54%). The trading volumes of this instrument have also increased - five times as much as last year, up to 2.8 trillion rubles.
Money market funds are a type of mutual funds (when investors' funds are pooled and used to purchase assets). Their peculiarity is that they, as a rule, earn on lending currency (mainly rubles and yuan) to large financial market players. The profitability of such investments is interrelated with the key rate and usually corresponds to it. It is believed that the risks of investing in money market mutual funds are minimal, as the money cannot "go negative", but the returns may decrease.
Money market funds have gained huge popularity, investments in them are record-breaking, confirmed in "BKS Investment World". Only in September-October of this year people invested 208 billion rubles in them, which is comparable to the results of the whole 2023.
The Central Bank reported in its December "Brokers' Key Indicators Review" that money market funds together with floating coupon bonds were the most popular among investors in 2024. In fact, these two instruments were the drivers of the financial market in the past year, emphasized Dmitry Tselischev, managing director of investment company "Rikom-Trust".
However, compared to deposits, investments in money market funds are still small. By November 2024, Russians have brought more than 7 trillion rubles in deposits, and only half a trillion rubles in money mutual funds.
The creation of money market funds is a trend for 2023 and 2024, when the income from the provision of borrowed funds increased significantly, emphasized NAUFOR President Alexei Timofeev. During this year, when the key rate rose from 16% to 21%, the number of money mutual funds more than doubled from eight to 20, InvestFunds data shows.
How money market mutual funds work
These funds invest in money market instruments - mainly reverse repurchase transactions with the National Clearing Center. The fund buys securities from the NCC for rubles or other currency, which it uses for its operations, and sells them back to it after an agreed period of time at a higher price. In essence, such transactions are loans secured by securities, so the yield on them is growing along with the key rate (in other words, along with the cost of money) - in 2024, it reached a record high of 21%.
The yield on reverse repos with NFPs is closely related to and usually equal to the RUSFAR rate (Russian Secured Funding Average Rate). As of December 26, it was 20.4%.
In addition, portfolios of money funds may consist of bonds of issuers with high credit ratings and short maturities, and also sometimes include bank deposits - the profitability of both these instruments also depends on the key rate. In other words, money market mutual funds are low-risk conservative instruments that allow you to significantly increase your funds under conditions of tight monetary policy. Sometimes they are even called analogs of stock exchange deposits.
But money market mutual funds, unlike deposits, are not bought for a fixed period of time - an investor can sell the fund's units at any time when the stock exchange is open, without loss of accumulated income, emphasized Aisha Kubezova, Director of Sberbank's Electronic Markets Department.
This gives greater flexibility in asset management, explained Valentina Savenkova, Project Manager of Veles Capital Investment Company. According to her, investors buy such an instrument, get their high yield and in this comfortable position wait for signals from the market to purchase shares. When there is an opportunity to profitably take any paper with growth potential, it can always be done by selling a part of shares - in this case the balance of risks and returns from investments is preserved.
However, the Russian stock market has been falling since May, reminded Freedom Finance Global analyst Vladimir Chernov. Over the past six months, the MosBirch index, which consists of shares of the largest Russian companies, has fallen by 13% to the level of 2,700 points. This is due to the increase in the key rate - unfavorable lending hits the companies and their securities turn out to be less attractive. In addition, investors are leaving shares for more profitable instruments - money funds, bonds, deposits.
And it should be borne in mind that money market funds are still a more complicated instrument than deposits, warned economist Andrei Barkhota. Funds on deposits are insured up to 1.4 million rubles, while the investments of shareholders are generally unprotected. In addition, bank products guarantee high returns for a fixed period of time - for example, deposit rates for a year now reach 24%, while the interest on mutual funds can change every day.
Nevertheless, the value of assets of the money fund is protected from "going into the minus" - money, unlike securities, can not fall in value, they will always need NCC for operations, said the head of the sales department of MC "First" Andrei Makarov. The only question is the speed of the fund's growth - its profitability.
Where to invest in the stock market in 2025
The trend in the popularity of money funds will last as long as the key rate will be high, and therefore borrowed funds will remain expensive, said the president of NAUFOR Alexei Timofeev.
On December 20, the Central Bank unexpectedly for the market kept the key rate at 21%, but experts assume its further growth up to 25% next year. The Central Bank itself includes this probability in its medium-term forecast - in 2025 the average rate will amount to 17-20%.
Money mutual funds will continue to grow in the first half of 2025, believes Dmitry Tselischev from Rikom-Trust. They will still pull investors' money from deposits because of the greater convenience of asset management and from the stock market because of higher returns, emphasized Andrei Barkhota.
With the reduction of the key rate, which is planned for the second half of 2025, the growth of money funds will slow down, but will not stop, emphasized Vladimir Chernov from Freedom Finance Global. There will definitely not be a sharp decrease in demand for them. The relevance of the instrument will remain even at a more modest rate, but when it falls below 10-12%, the market will start looking for ways to invest funds with a higher yield.
