informed decisions blog

Money Market Funds For Company Cash? Blog231

2nd October 2023

Paddy Delaney

Money Market Funds Ireland

Today, we embark on an oceanic exploration of a topic of paramount significance to every discerning business owner, whether or not to use Money Market Funds for Company cash! Indeed, this topic can and will apply to business owners and non-business owners alike, it’s just that business owners are usually more concerned about having large amount of money sitting in cash!

The Irish Investing Seascape

The prudent management of corporate finances in Ireland often resembles navigating a transatlantic solo voyage. Of course, one can simply leave their company cash sitting in the bank, but we all recognise that is seriously wasteful, and can lead to shipwreck!

If you want to do anything else, it’ll unfortunately be less than straightforward. This is partly due to the complex tax regime on investments, partly due to the myriad regulated and unregulated investment solutions, and partly due to the poor interest rates being passed on to corporate depositors. Fear not, Money Market Funds may serve as as potentially unwavering investment ‘true north’ that your business seeks?

What Exactly Are Money Market Funds?

Money Market Funds, often denoted as MMFs, classify as a category of collective investment vehicles, engineered to cater to short-term investments. They hold cash, cash equivalent securities, and high-credit-rating, debt-based securities with a short-term maturity (such as short-term U.S. Gov Bonds).

They are much like an index fund in that there are many many individual assets held within the single fund. You buy a single fund, and by doing so hold a diverse collection of assets. Indeed there is nothing stopping you, and it may be prudent, to consider buying 2 or more Money Market Funds in Ireland (MMFs) and creating a portfolio of them, for diversity-sake, if you do decide to use MMFs.

They give companies and individual investors (who can access them) a secure and liquid solution for the deployment of surplus cash. The idea being that they generate returns that surpass those from conventional bank savings accounts or term deposits.

Imagine a hypothetical scenario in which your company €1m in idle cash resources sitting in bank. For whatever reason you have not reinvested it in the business, nor into a tax efficient PRSA for yourself or a loved one (Read Blog215 for more on that idea), nor taken it as bonus.

Instead of allowing these assets to languish within a zero-yielding deposit account, you opt to allocate the €1m to a MMF. Over the course of a year, the MMF portfolio generates a return of say 3.5%, culminating in a gross gain of €35,000. And much like any activity of a company or individual, gains will be taxed! For a corporate entity, tax rate of 25% applies to investment activities.

Shall I state the obvious? Even after tax, this return would constitute a notably more remunerative endeavor than the meager interest accrued within a conventional savings account!?

Depending on the assets; quality, duration, deemed risk level; you can achieve upwards of 5% on some Money Market Funds as of October 2023. US-focused MMFs currently yielding those rates, Euro-focused MMFs currently 3.5% territory, as a guide.

Why Consider Money Market Funds for Company Cash?

I’ve always felt that when it comes to investing, we have to balance 3 things; Security, Access and Growth (SAG!). And usually, you can only have 2 of the 3! For example, if it is Secure and Accessible, you’ll not achieve the Growth. And in reality, Money Market Funds in Ireland are of that ilk.

1. Safety First (security):

MMFs are renowned for their unwavering commitment to safety and their low-risk profile. On that useless ‘risk rating’ scale, Money Market Funds usually sit at a ‘1’, while unregulated Mongolian Cave Art investments would sit at a ‘7’!

MMFs predominantly channel investments into highly liquid, short-term debt securities issued by reputable entities such as governments and banks. In Ireland, the regulation of MMFs is executed by the Central Bank, thereby ensuring an environment of confidence for those investing large sums of hard-earned company cash. But of course, there is no government guarantee as such on MMFs, so they do differ from deposits in that regard, up to certain levels.

2. Liquidity Galore (access):

Particularly in a commercial context, access to your cash assets is often of paramount importance! In this regard, MMFs usually excel, offering daily liquidity. This feature affords you the agility to promptly access your cash when and if the need arises, without penalty.

This level of liquidity can give a certain comfort. Of course, this can change, as was seen in the Great Financial Crisis when investors panicked and there was mass exits from US MMFs, forcing some of them to suspend withdrawals/redemptions for a period, to avoid a fire-sale on the funds’ assets.

3. Competitive Yield (growth):

While the tenet of safety remains paramount, MMFs are also driven to deliver competitive yields (relative to deposits!). Given Ireland’s enduring low-deposit-interest-rate environment, MMFs currently offer returns that significantly outpace those attainable through conventional savings accounts or term deposits.

However, their growth prospects comparable to long term equity are not good. If you were doing very well, MMFs might help you keep abreast of inflation over the medium term but don’t expect them to deliver well in excess of inflation.

MMFs are not a substitute for a well diversified equity/growth portfolio. So while they deliver growth to a degree, it’s not the sort of long term growth a retiree who draws an income for multiple decades usually needs.

4. Diversification Benefits:

MMFs adopt a judicious approach by diversifying their investments across various short-term instruments. This strategic diversification effectively mitigates the risks associated with a singular asset, thereby fortifying your corporate funds against unforeseen downturns within specific sectors. Usually, if you look closely, you’ll see a Money Market Fund holds 100-300 different assets, securities and treasuries.

5. Ease of Use:

The process of investing in MMFs is characterized by its simplicity and accessibility. You can readily establish an account with a reputable advisor or platform. Granted, the paperwork required to establish a corporate account is lengthy, as is the list of requirements, but it could be an hour or two very well spent!

How to Select the Appropriate Money Market Funds in Ireland

1. Check the Fund’s Holdings:

Scrutinise the composition of the MMF’s portfolio. The quality, and diversity of holdings therein hold pivotal significance.

2. Costs and Fees:

Get to grips with the management and other fees that may be associated with the fund. Particularly on these sorts of investments. If you hope to achieve say 3.5% return, and are going to be paying 1.5% in fees, and then pay tax on any gains; it all but defeats the purpose! Make sure there is something in it for you before investing in them!

3. Credit Quality:

Evaluate the creditworthiness of the issuers within the fund’s portfolio. Generally, higher-rated securities denote lower risk. Last thing you want to be holding is a high yielding MMF made up of Junk Bonds, in my view! Your ability to sleep at night is surely worth more than that!

4. Regulatory Compliance:

Ensure that the MMF adheres rigorously to the regulations stipulated by the Central Bank of Ireland, or wherever they are regulated. Ask for clarification on this, and seek evidence or documentation to confirm their regulated status. If you are given a Key Investor Document, and a Fact Sheet, you should be able to observe and verify these important aspects. This adherence safeguards the integrity of your investment.


Money Market Funds can be deemed a worthy solution within your corporate cash management strategy. Their potential blend of security, access and (relative!) growth renders them an appealing option for many small businesses to use in the short term.

Of course, prior to embarking on an investment decision, it is imperative to seek counsel from a decent financial advisor and/or accountant and tax person. And it is prudent to bear in mind that while MMFs offer stability and returns, they constitute merely a tiny aspect of the entire investment universe, they are not a one-and-done solution for all needs. A diversified approach to cash management stands as the most prudent route to navigate your business’ needs for security, access and growth.

In the ever-evolving Irish investment seascape, the steady hand on the helm, and the distant perspective can make all the difference!

Hope it helps,




The content of this site including blogs and podcasts is for information purposes only. Everybody’s financial situation is different and the content we share on our site and through podcasts may not be applicable to you. 

The articles, blogs and podcasts are not investment advice. They do not take account of your individual circumstances, including your knowledge and experience and attitude to risk. Informed Decisions can’t be held responsible for the consequences if you pursue a course of action based on the information we share

Retired or close to it?

Informed Decisions are one of Ireland’s only remaining independent financial advice firms. We specialise in retirement & investment planning for successful individuals, so that our clients only have to retire once.

Retire Successfully • Reduce Taxes • Invest Smarter

Find out how we can help...

Our Process