How to invest in the money market using ETFs

How do I invest in money market ETFs?

Money market ETFs are an interesting alternative to traditional savings accounts. The return of money market ETFs is closely aligned to the overnight rate, which is a rate of interest that’s only offered to the largest, most secure financial institutions such as banks. The overnight rate is usually calculated by the central bank that supervises the ETF’s target market, for example the ECB in the European Union and the Federal Reserve in the US. The interest rates paid by easy access bank accounts are heavily influenced by the overnight rate, too, but are usually lower than the yield that can be achieved with money market ETFs.
 
For ETFs, money market exposure is achieved either by investing in very short-term government bonds or other fixed-income securities with excellent credit ratings or by synthetically replicating a deposit bearing interest at the respective reference rate (e.g. the Euro Short-Term Rate (€STR) in the case of the Euro).
 
In addition to the potentially higher returns, another advantage of money market ETFs compared to a traditional savings account is that statutory deposit protection does not play a role. While deposits at a European bank are only protected up to a certain threshold (typically 100,000 Euro in Western European countries) by the deposit protection scheme of the respective country, larger sums can be invested in a money market ETF, as these are protected by the regulations and compensation schemes that apply to UCITS funds.

This makes money market ETFs an excellent option for short-term investments or the low-risk portion of a portfolio.

You will find more information on money market ETFs in our article „Money market ETFs: Are they a useful alternative to holding cash in the bank?“.

In this ETF guide, you will find all currently available money market ETFs that are linked to the reference interest rate in the Eurozone.

• For the selected country of origin, there are no money market ETFs available.
  You are able to select your country of origin on the top of the screen.

When choosing a money market ETF one should consider several other factors in addition to the methodology of the underlying index and performance of an ETF. For better comparison, you will find a list of all money market ETFs with details on size, cost, age, income, domicile and replication method ranked by fund size.

Compare all money market ETFs in detail
Compare all money market ETFs in a chart

• For the selected country of origin, there are no money market ETFs available.
  You are able to select your country of origin on the top of the screen.