Money market investments are very popular among private investors and institutional investors in Switzerland. In 2024, money market products in Swiss francs continued to draw a lot of money and are still considered attractive.
Swiss Life Asset Managers’ calculations show that Swiss money market funds grew significantly again in 2024. The increased demand for money market products correlated very directly with the rise in interest rates, particularly in the first half of the year. Since the summer, however, most Western central banks have shifted into reverse gear and policy rates have been lowered across the board. The primary reason for this being diminished concerns over inflationary risk not being able to be averted on time.
Towards the end of the year, the dominant factors are the deteriorating economic outlook for Europe as an industrial and production site and the uncertainty around the US’s economic and fiscal policy after the presidential elections in November. Given the current somewhat unclear picture with regard to ongoing macroeconomic development, investors would be well advised to place a portion of their investment quota in the money market for the time being.
Money market investments still in demand
Banks continue to provide another incentive for converting account balances into money market investments by not passing on or delaying passing on the interest rate increase to their customers and, in many cases, continuing to apply an interest rate to account balances that is still significantly below money market rates – often even in combination with a capping of interest-bearing deposits.
Another key reason the trend of investing in money market funds is continuing is that running yields on the CHF money market are roughly double that of a 10-year Swiss government bond.
Money market investment generally have short maturities, eliminating the need to enter into any long-term commitments. This enables investors to observe further return opportunities and return to investments with a higher return potential at a later date. What’s more, diversified money market investments are an excellent alternative to liquidity in a bank account if, as well as capital preservation, daily access to cash and investments is of central importance.
Money market funds – broadly diversified collective investments
Swiss Life Asset Managers responded to the increased demand for money market funds back in 2023 by expanding its range of products. Money market funds are characterised by limiting investment risks to very sound borrowers on the one hand while restricting exposure to individual debtors in such a way that the credit risk to the overall portfolio is minimised on the other hand. In addition, the short maturities of these investments are associated with a significant reduction in sensitivity to interest rate changes.
In the case of money market investments, investing in collective investments like funds is generally advisable given the diversification effect. Investing directly in individual money market instruments can also be an option, but the desired portfolio effects, such as a balanced maturity profile, only become apparent at an institutional scale.
Money market expertise – credit analysis and securities selection are crucial
When managing the money market funds it offers, Swiss Life Asset Managers pursues independent credit analysis, a balanced securities selection and strict risk monitoring. For example, money market fund investments include money market debt register claims of the Swiss Confederation, SNB bills, covered bonds, time deposits and corporate bonds with a high or very high credit rating.
Professional asset managers have established and, as such, considerably cheaper market access than private investors. This is a decisive advantage, especially when it comes to a specialised area. As one of the biggest buyers on the CHF bond market, Swiss Life Asset Managers has at its disposal a very broad network on the primary and secondary market, which also benefits money market fund investments.
