Money Market Funds (MMFs) offer investors a relatively stable haven for capital preservation and high liquidity, and can potentially deliver higher returns than traditional savings accounts. This article will cover all aspects of money market funds in Hong Kong, including their operating principles, potential risks, fund rankings, and the latest market trends.
What are Money Market Funds?
A Money Market Fund is an open-ended mutual fund that specializes in investing in short-term, highly liquid, and low-risk fixed-income securities. Its main objective is to provide investors with capital preservation, daily liquidity, and stable returns.
The term “money” in Money Market Fund does not refer to cash itself but rather to a category of money market instruments—short-term, highly liquid, low-risk financial assets. These include short-term government bonds (e.g., Treasury bills), commercial papers, bank certificates of deposit (CDs), and repurchase agreements (Repos).
Since money market instruments mature in under one year, they are considered near-cash assets that can be quickly converted to cash—hence the term “money” to emphasize their liquidity and safety.
Historically, money market funds primarily served large financial institutions to meet their short-term funding and cash management needs. However, with the recent development of Financial Inclusion and FinTech, money market funds have become more popular. They are now used by general investors as a reserve for emergency funds, a temporary parking place while waiting for other investment opportunities, or simply as a tool for short-term fund placement with higher yields than bank savings accounts.
The 5 Key Features of Money Market Funds
- Low Risk: They primarily invest in short-term, highly-rated fixed-income products, which carry a low risk of default.
- High Liquidity: Investors can typically redeem their funds quickly, without being locked into a fixed term.
- Low Volatility: The net asset value of money market funds generally remains stable with minimal short-term fluctuations.
- Higher Returns: Money market funds typically offer a higher yield than bank savings accounts.
- Risk Diversification: The funds invest in a variety of short-term debt instruments, helping to diversify the risk of a single debt security.
Risks of Money Market Funds
- Interest Rate Risk: Although money market funds invest in short-term instruments, fluctuations in interest rates can still impact their returns.
- Credit Risk: The debt instruments in which money market funds invest may carry a risk of default under extreme circumstances.
- Liquidity Risk: In a stressed market, if a large number of investors redeem their funds simultaneously, the fund might struggle to sell its assets in a timely manner to meet redemption requests. This could force the fund to sell assets at lower prices, affecting its net asset value, as was seen in 2008.
- Not a Bank Deposit: Purchasing a money market fund is not the same as placing money in a bank and is not protected by the Hong Kong Deposit Protection Scheme.
The Hong Kong Money Market Fund Market
Traditionally, fund distribution channels in Hong Kong have been dominated by banks, but digital investment platforms are becoming increasingly important with the development of FinTech. A joint product survey by the SFC and HKMA in 2022 showed that money market funds were the top-selling collective investment schemes They accounted for 61% of the total transaction value of the top five collective investment schemes in 2022, up from 33% in 2021, far surpassing bond funds (14%) and stock funds (7%).
A 2024 survey of Hong Kong investors by the Hong Kong Investment Funds Association revealed that over half (52%) of respondents listed “regular income” as one of their top three investment goals, exceeding the 49% who prioritized capital appreciation. This indicates that products offering regular income hold a significant position in asset allocation, making money market funds a popular choice for Hong Kong investors.
Many established asset managers in Hong Kong now offer money market funds in multiple currencies—including HKD, USD, and RMB. In the first 8 months of 2025, the ten best-performing money market funds in Hong Kong were all USD-denominated, with year-to-date returns ranging from approximately 2.8% to 3.1%.
Key Factors to Consider When Choosing a Money Market Fund
Since many financial institutions offer money market funds, it is important to consider the following factors when selecting one.
- Asset Quality
Asset quality indicates the creditworthiness of the fund’s underlying assets and its ability to maintain a stable net asset value. A higher credit rating means a lower risk of losses due to default or interest rate fluctuations. - Fund Size and Weighted Duration
Larger funds tend to be more diversified and can benefit from economies of scale. Weighted duration represents the time it takes for its short-term assets to mature.
A longer weighted duration may bring higher returns, but it can also pose an interest rate risk if you need to sell before maturity. - Total Return: While past performance does not guarantee future returns, it can provide valuable insight into the fund’s consistency. It is important to note that because MMFs use short-term instruments, their yields may be more sensitive to interest rate fluctuations.
- Fees: Check the fund’s management and other fees, such as administration or withdrawal fees. These fees can impact your net return.
Hong Kong Money Market Fund Ranking
A larger fund size can allow a money market fund to benefit from economies of scale. According to data from the HKEX IFP platform, the following are the top 5 money market funds in Hong Kong by size as of July 31, 2025:
| Fund name | CE no. | Base currency | Fund AUM(USD M) | Fund AUM date |
| Bosera Global Public Funds Series Open-ended Fund Company – Bosera USD Money Market Fund | BSG677 | USD | 9394.65 | 2025-07-31 |
| Taikang Kaitai Funds – Taikang Kaitai US Dollar Money Market Fund | BSG589 | USD | 6314.78 | 2025-07-31 |
| ChinaAMC Select Fund – ChinaAMC Select USD Money Market Fund | BSR551 | USD | 5892.19 | 2025-07-31 |
| Ping An of China Select Investment Fund Series – Ping An Money Market Fund | BQN919 | USD | 5389.52 | 2025-07-31 |
| GaoTeng WeFund – GaoTeng WeInvest Money Market Fund | BNW892 | HKD | 4731.91 | 2025-07-31 |
Earn 4.4% p.a. on your uninvested cash
Syfe Cash+ Flexi lets you earn more on your savings with a yield of 4.4% per annum for Flexi USD and 2.3% per annum for Flexi HKD.
The Cash+ Flexi portfolio is constructed using SFC-authorised Money Market Funds from Gaoteng and Taikang, the two major asset managers in the money market fund space in Hong Kong. The objective of Cash+ Flexi is to enable investors to achieve a return in line with or above the prevailing money market rates, with primary considerations of maintaining low risk and high liquidity.
Disclaimer:
*The yield presented here is estimated based on the weighted average of the Yield to Maturity of assets within Cash+ Flexi USD discretionary service. The latest yield, provided by asset managers, is as of (insert date), and is subject to change based on market conditions such as interest rate changes. Yield is not a guarantee of future performance. A positive yield does not imply a positive return. Investments involve risks and Cash+ Flexi USD does not provide any guarantee or assurance of returns.
**Time deposit account benchmarks are taken from 3, 6 and 12-month term rates offered by the top 5 Hong Kong banks (in terms of total assets), as of 12 May 2025.
Cash+ Flexi is a low-risk investment portfolio managed by Syfe. It is not a savings or deposit product at a bank. Investments involve risk and Cash+ Flexi does not provide any guarantee or assurance of returns.[Learn more]
