Money-market funds: what MAS rules allow them to hold, why they are not deposits, and where to check fees and redemption

A money-market fund pools money from many investors, which a fund manager invests in high-quality short-term debt instruments and eligible bank deposits. It is a collective investment scheme (CIS), usually offered in Singapore as a unit trust. It aims for low volatility and good liquidity, but legally it is an investment, not a deposit: investors hold units in the fund, the unit value can go up or down, and it is outside deposit insurance. It differs from a T-bill in that a T-bill is a government security you hold directly and is repaid at face value at maturity, whereas a money-market fund holds a basket of instruments on your behalf, with no maturity date and no promise to repay face value.

The hard rules MAS sets for money-market funds

A fund offered to the public in Singapore with "money market" in its name must comply with Appendix 2 of the MAS Code on Collective Investment Schemes. The table below summarises the core provisions of the version revised on 2 Jul 2026.

These rules limit the maturity and liquidity risk a fund can take on, but they do not remove risk. "High quality" refers to a threshold for credit rating or issuer quality, not a government guarantee; the liquid asset ratios help a fund meet part of its redemptions in normal conditions, not guarantee full redemption at the original price at all times.

Why a money-market fund is not a deposit

The SDIC FAQs state that insured deposits are Singapore-dollar deposits placed with the Singapore branch of a Scheme member, and that foreign-currency deposits, structured deposits and "investment products such as unit trusts, shares and other securities" are not insured (SDIC Deposit Insurance FAQs, accessed Oct 2026). The MoneySense explainer on deposit insurance (28 Sep 2026) likewise lists unit trusts as uninsured products. Even if a money-market fund places part of its money with a bank, there is no deposit relationship between you and the bank: the bank's depositor is the fund (represented by the trustee), not you.

Fund documents usually carry statements such as "buying units is not the same as placing a deposit with a bank" and "this fund is not capital guaranteed"; find and read that passage before you buy. This is why this site does not describe money-market funds as "cash", "a substitute for a current account" or "capital guaranteed". For the full boundaries of deposit insurance and other protection schemes, see What protects your money.

Where the risks come from

Money-market funds usually fluctuate less than bond funds and equity funds, but the following risks remain:

1. Credit risk: if the issuer of commercial paper, certificates of deposit or corporate bonds held by the fund defaults or is downgraded, the unit value falls.
2. Interest rate risk: when market rates rise, the prices of fixed-income instruments already held fall; the caps on weighted average maturity and weighted average life in Appendix 2 exist precisely to contain this risk.
3. Liquidity risk: in stressed markets or when large redemptions come in together, the fund may have to sell assets at a discount, or defer or limit redemptions as permitted by its documents.
4. Falling-yield risk: fund returns track short-term rates, so they fall when rates fall, and the actual return after fees may be lower than expected.
5. Currency risk: for money-market funds denominated in US dollars or other foreign currencies, returns measured in Singapore dollars are also exposed to exchange rate movements; see Multi-currency cash and FX risk.

Past performance of any fund is not indicative of future results. This site does not list yields for individual funds and does not recommend any fund or platform by name.

Returns, fees and redemption: which documents to read

MoneySense notes that funds must be offered with a prospectus and a Product Highlights Sheet (PHS), that net asset value is usually calculated daily, and that most funds in Singapore can be bought and sold daily. The table below shows the order in which to read them and what to look for.

On fees, the MoneySense "Unit trusts — Guide to pricing and fees" (15 Jul 2026) lists the types as: the sales charge paid to the distributor on purchase, the redemption charge, the management fee paid out of fund assets, and other fees paid to the trustee and other service providers. Fund-level fees together make up the total expense ratio (TER), which should be disclosed in the factsheet. The fee ranges in the guide relate to unit trusts in general; the actual charges on a money-market fund follow its own documents. Because the gross return on a money-market fund is modest to begin with, fees take a proportionally larger bite out of the net return, so compare figures after fees.

Redemption settlement times are set out in each fund's prospectus, and processing times also differ between platforms. If a sum must be paid out on a particular date, work backwards from the settlement time stated in the documents rather than assuming the money will arrive at any time.

Market background: why money has been flowing into money-market funds

According to a report in The Asset on fund flows in Singapore's fund industry in the second quarter of 2025, inflows into money-market and fixed-income funds rose markedly that quarter while interest in equity funds cooled, which the report summarised as investors putting safety first amid global market uncertainty (The Asset, 3 Sep 2025). For the actual inflow amounts, refer to the fund flow reports published by the Investment Management Association of Singapore (IMAS). Some investors use money-market funds as a home for short-term money alongside bank deposits and T-bills, and this tends to shift as the interest-rate environment changes.

Fund flows describe market behaviour; they do not show that money-market funds are "better". Flows tend to change with interest rates and market sentiment. For an individual, what matters is whether the money can tolerate small movements in unit value, whether the redemption settlement time matches the date the money is needed, and whether deposit insurance protection is required. If the answer is "I need a certain principal on a certain date", a fixed deposit or a T-bill held to maturity fits that need better.

Tax treatment

IRAS's "What is taxable, what is not — Dividends" (27 Feb 2026) lists "unit trusts in Singapore" among examples of dividends not taxed for individuals, with separate treatment where income is received through a partnership or a trade or business. Distributions to individuals from Singapore-registered money-market funds are therefore generally not subject to income tax under current rules, and Singapore has no capital gains tax on gains from a rise in unit prices. Funds domiciled overseas but offered in Singapore may treat distributions and withholding tax differently; the fund documents and IRAS rules prevail.

For cross-border tax and CRS reporting, see Multi-currency cash and FX risk.

How money-market funds, T-bills and fixed deposits divide the work

A common division of labour is to lock in money with a known horizon through fixed deposits or T-bills, and to consider a money-market fund only for money whose amount and timing are both uncertain and which you do not want to leave in a low-interest current account, accepting that it is not covered by deposit insurance. For the full comparison of the three, see the like-for-like comparison; for the layering method, see the cash layering checklist. If you would like this interpreted for your own circumstances, you can register your needs through the contact details on this site.