Part 1/7: What Is a Money Market Fund and Why Everyone Is Talking About It in Uganda?
“I invested... they keep saying the money will be put in money markets. What is that?”
— Kathy, Impala Market reader
TL;DR
A money market fund is a low-risk, short-term investment tool.
It earns more than your savings account but is still flexible and safe.
It’s perfect for beginners, emergency savings, or short-term goals.
Returns are not fixed, they vary with market interest rates.
Always read your statement to understand your gains and fees.
What is a Money Market Fund?
A money market fund (MMF) is a type of investment that pools money from many people and invests it in short-term, low-risk financial instruments like:
Treasury bills (short-term government debt)
Commercial paper (short-term loans to companies)
Fixed deposits in banks
Think of it as a safe parking spot for your money, earning better interest than a savings account, but without locking your money away for years like a bond or fixed deposit might.
Why a Money Market Fund?
Because money market funds are easy to join, low risk and earn more than savings accounts, they have become the go-to investment product in Uganda.
Most unit trusts, mobile money apps and digital savings platforms now include MMFs in their product offerings especially for first-time investors.
Low minimum investment (UGX 10,000 to UGX 100,000)
Withdraw anytime (1–2 day settlement)
Better returns than your bank savings account
Where Does Your Money Go?
When you deposit money into a money market fund:
The fund manager pools it with other investors' money.
They invest it in safe, short-term instruments like Treasury bills.
Any profit (interest earned) is shared among all investors, minus fees.
For example, if the fund earns 10% per year and charges a 1% management fee, you may earn about 9% annually on your investment, paid out daily or monthly.
Why Do Money Market Fund Returns Change?
Your monthly email may show:
The interest earned that month
The annualized return (if you stayed for a full year)
Changes in value (small up or down movements)
Returns can change because:
Treasury bill yields move up or down
The fund invests in slightly different instruments
Market conditions (like inflation or government borrowing) shift
If you earn UGX 3,200 in interest this month on UGX 1 million, your return is about 0.32% for the month (or ~3.9% annualized).
How to Read Monthly Statements
Most MMFs send statements that show:
Opening balance
Contributions (what you deposited)
Withdrawals
Interest earned
Fees charged
Closing balance
Tip: Focus on interest earned and closing balance. You can track how your investment is growing over time.
What to Look Out For Before You Invest
Not all money market funds are equal. Check:
Licensing – Is the fund licensed by the Capital Markets Authority (CMA)?
Track record – How long has it been running?
Past returns – What’s the average return over the last 6–12 months?
Liquidity – How fast can you withdraw your money?
📩 Next in the series:
“What Drives Money Market Returns in Uganda and How to Compare Funds.”
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