4 Best Money Market Funds in Australia (High-Yield & Low-Risk for 2025)
4 Best Money Market Funds in Australia (High-Yield & Low-Risk for 2025)
Look for low risk investments that focus on capital preservation, liquidity and income. The funds featured invest in high quality short term securities and offer competitive returns with minimal volatility for conservative investors.
Funds like the Vanguard Cash Reserve Fund, HSBC Australian Dollar Liquidity Fund, iShares Core Cash ETF (BILL) and UBS AUD Money Market Fund P-acc provide income and liquidity for short term goals.
Get the details on each fund’s features, fees, performance and how these are a safer alternative to traditional savings accounts for cash management.
Please note that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly on our website, blogs , newsletters.
Vanguard Cash Reserve Fund
Vanguard Cash Reserve Fund is a favourite among Australian investors for a low risk investment that preserves capital and provides liquidity with income.
Managed by one of the world’s leading investment management companies, this fund is for those who want minimal volatility with reasonable returns short and long term.
Whether you’re an experienced investor or just starting out, read this to help you decide.
Vanguard Cash Reserve Fund Features
Vanguard Cash Reserve Fund is designed to generate current income while maintaining liquidity and a relatively stable capital value. The fund invests in high quality short term fixed income securities and cash instruments, perfect for conservative investors.
Fund Name: Vanguard Cash Reserve Fund
APIR Code: VAN0020AU
Fund Start Date: 31 October 2007
Fund Size: $609.62 million (as of 31 December 2024)
Buy/Sell Price: $1.0045 (as at now)
Management Fee: 0.15%
Distributions: Monthly
The fund’s aim is to provide competitive returns with minimal risk by investing in a blend of high quality short term assets. Its conservative approach makes it a safe haven for your capital.
Performance and Returns
Performance is key to any investment fund. Vanguard Cash Reserve Fund has a solid performance record, delivering income returns with capital stability.
Vanguard Cash Reserve Fund Returns (as at 31 December 2024)
Income return has been consistent over time, total return is driven by interest income. Growth return is minimal as expected from a fund designed for capital preservation not capital growth.
Asset Allocation
Vanguard Cash Reserve Fund invests in a blend of short term, high quality fixed income securities and cash instruments. The asset allocation strategy provides liquidity with low risk.
Most of the fund is invested in fixed interest securities which provide a steady income stream. The balance in cash instruments provides liquidity so you can get your money back with minimal risk.
How we invest your money
Vanguard Cash Reserve Fund has a conservative approach to investing, focusing on capital preservation and liquidity. The fund invests in high quality short term debt instruments, including government securities, bank deposits and corporate bonds with high credit ratings.
Key features of the strategy:
Diversification: The fund spreads investments across different short term securities to reduce risk.
Credit Quality: Holdings are mainly investment grade securities with high credit ratings.
Short Duration: By investing short term, the fund reduces interest rate risk.
Liquidity: A large portion of the portfolio is in cash or near cash to get your money back easily.
This makes the fund a good option for conservative investors looking for a safe and liquid investment.
Fees and Charges
One of the benefits of the Vanguard Cash Reserve Fund is its low cost. Vanguard is known for its investor friendly fee structure and this fund is no exception.
Management Fee: 0.15%
No Performance Fees: No performance fees like actively managed funds.
Low Transaction Costs: Being a passive and liquid fund, the fund has minimal transaction costs.
These low fees makes it a good option for cost sensitive investors to get more of their returns.
Why Invest in Vanguard Cash Reserve Fund
Here are a few reasons to consider investing in the fund:
Capital Preservation: The fund aims to keep the value steady and generate income.
Liquidity: You can get your money back easily, so good for emergency funds or short term savings.
Regular Income: Monthly distributions.
Low Fees: Lowest in its category.
Diversification: Invests in a range of high quality short term securities to reduce risk.
Disadvantages
While Vanguard Cash Reserve Fund has many benefits, it may not be for everyone. Here are some of the drawbacks:
Lower Returns than Equities: As a conservative fund, it gives lower returns than equity funds.
Minimal Growth: Designed for income not for capital appreciation.
Interest Rate Risk: Returns may go up or down with interest rates.
Who is this fund for?
Vanguard Cash Reserve Fund is suitable for:
Low risk investors.
Short term liquidity for your needs.
Stable income with minimal price movement.
Diversification by adding cash and fixed income securities.
Alternative to savings accounts with higher yields.
HSBC Australian Dollar Liquidity Fund
HSBC Australian Dollar Liquidity Fund offers capital preservation, liquidity and regular income through high quality short term securities. It’s for investors who want stability, competitive returns and easy access to cash with minimal risk.
Managed by HSBC, a global financial leader, the fund has expert asset management. It’s a safe investment option for both experienced and new investors to manage their cash flow efficiently.
This fund is for those who want financial stability without market volatility. The diversified strategic management deliver consistent performance making it a good option for conservative investment.
HSBC Australian Dollar Liquidity Fund Features
HSBC Australian Dollar Liquidity Fund aims to generate income while keeping liquidity and capital stable. It invests in high quality short term fixed income securities so it’s good for risk averse investors.
Fund Name: HSBC Australian Dollar Liquidity Fund
APIR Code: HSB0007AU
Fund Inception Date: 30 June 2003
Fund Size: $1.25 billion (as of 31 December 2024)
Entry/Exit Price: $1.0001 (as of now)
Management Fee: 0.18% p.a.
Distribution Frequency: Monthly
The fund’s primary objective is to provide investors with a safe and liquid investment that gives competitive returns. Its conservative approach minimises volatility so it’s good for those who want capital protection.
Performance and Returns
Performance is important for any fund. HSBC Australian Dollar Liquidity Fund has been delivering stable income returns while preserving capital value.
HSBC Australian Dollar Liquidity Fund Returns (As of 31 December 2024)
The total returns are mainly from interest income, minimal growth returns which is in line with its capital preservation focus and low risk investment approach for stability.
Asset Allocation
HSBC Australian Dollar Liquidity Fund has a conservative asset allocation approach, prioritising liquidity, low risk and capital preservation while generating income through short term high quality securities.
Most of the fund is invested in fixed interest securities to generate income and the cash allocation provides liquidity to investors.
How We Invest Your Money
HSBC Australian Dollar Liquidity Fund has a low risk approach, investing in high quality short term debt securities to maintain liquidity, preserve capital and provide stable returns to conservative investors.
Key features:
Diversification: Across various high quality short term securities.
Credit Rating: Investment grade securities only.
Short Term: Short term instruments to reduce interest rate risk.
Liquidity: A large portion held in cash and near cash instruments for easy access.
This conservative approach makes the fund a good option for investors looking for a stable and liquid investment.
Fees and Charges
HSBC Australian Dollar Liquidity Fund has a low cost structure to add value to investors.
Management Fee: 0.18% p.a. to provide cost effective liquidity and stable returns for conservative investors.
No Performance Fees: No performance fees like actively managed funds so investors get to keep more of their returns.
Low Transaction Costs: Passive and liquid nature keeps transaction costs low, good for capital preservation and cash management.
Why Invest in HSBC Australian Dollar Liquidity Fund
Here are the benefits:
Capital Preservation: Preserves a stable NAV while generating income.
Liquidity: Easy access to funds for emergency or short term needs.
Regular Income: Monthly distributions for predictable income.
Low Fees: Competitive management fee to boost returns.
Diversification: Exposure to various high quality short term securities to reduce risk.
Disadvantages
While the fund has many benefits, there are some drawbacks:
Lower Returns than Equities: This conservative fund provides stability but lower returns than equities so limited growth for investors.
Limited Growth: Designed for income generation only, no significant capital appreciation so not suitable for aggressive wealth creation strategies.
Interest Rate Risk: Fund performance affected by interest rate movements, investors need to watch economic conditions closely.
Is this fund for you?
HSBC Australian Dollar Liquidity Fund is suitable for:
Low risk investors who want capital stability.
Investors who need liquidity for short term goals.
Investors who want stable income with minimal volatility.
Looking for an alternative to traditional savings accounts with higher returns.
Please note that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly on our website, blogs , newsletters.
iShares Core Cash ETF (BILL)
iShares Core Cash ETF (BILL) provides investors with capital stability, liquidity and regular income by investing in high quality short term money market instruments. Suitable for low risk investors who need easy access to cash.
Managed by BlackRock, a global investment leader, this ETF has the expertise of a professional portfolio manager. A cash alternative so good for conservative investors and those managing short term cash allocations.
Good for investors who want stability over growth. Diversified holdings and asset allocation for consistent returns so a good option for capital preservation and cash management.
iShares Core Cash ETF (BILL) Features
iShares Core Cash ETF (BILL) provides liquidity and capital stability while generating income. Invests in high quality short term fixed income securities for risk averse investors.
Fund: iShares Core Cash ETF (BILL)
Code: BILL
Inception Date: 6 March 2017
Size: $3.1 billion (as at 31 Dec 2024)
NAV: $100.02 (now)
Management Fee: 0.07% pa
Distributions: Monthly
The ETF’s objective is to offer a safe and liquid investment that generates competitive returns with minimal volatility. Conservative so good for investors who want capital preservation.
Performance
Performance is key for investors looking at short term fixed income investments. iShares Core Cash ETF (BILL) has been delivering steady returns while preserving capital.
iShares Core Cash ETF (BILL) Returns (as at 31 Dec 2024)
The fund generates returns through interest income rather than capital growth as it’s focused on stability and liquidity.
Asset Allocation
iShares Core Cash ETF (BILL) follows a conservative asset allocation strategy, capital stability and liquidity while generating returns through short term fixed income securities.
Most of the fund is invested in fixed interest securities for stable income and the cash component for liquidity so investors can get access to their money quickly.
How the ETF Invests Your Money
iShares Core Cash ETF (BILL) follows a low risk strategy, investing in high quality short term debt securities, liquidity, stability and income for conservative investors who want capital preservation.
Key investment principles:
Diversification: The fund provides exposure to various short term money market instruments to reduce risk and increase overall stability for investors.
Credit Quality: Invests in high rated securities to minimize default risk and provide a safer investment.
Short Duration: By investing in short term securities the ETF reduces interest rate risk and protecting investors from market volatility.
Liquidity Focus: With a high cash component the ETF is easily accessible so investors can get out when needed.
This conservative approach makes it good for those who want a stable and liquid cash management.
Fees and Charges
iShares Core Cash ETF (BILL) has a cost effective structure to maximize returns for investors by keeping fees low low and is good for conservative investment strategies.
Management Fee: 0.07% p.a. to keep costs low and returns higher for investors.
No Performance Fees: Investors get to keep all the income as there are no performance fees to eat into the returns.
Low Transaction Costs: Being a passive and liquid fund, the ETF has low trading costs for efficient and cost effective investment management.
Why Invest in iShares Core Cash ETF (BILL)
Several reasons to invest:
Capital Preservation: To maintain a stable NAV and generate income.
Liquidity: Easily accessible for short term needs.
Regular Income: Monthly distributions for predictable cash flow.
Low Fees: Cost effective structure to boost net returns.
Diversification: Exposure to multiple high quality fixed income securities to reduce risk.
Disadvantages
Lower Returns than Growth Investments: Stable but lower than equity or high yield investments.
No Capital Growth: Fund is income focused so limited appreciation.
Interest Rate Risk: Returns move with interest rates, need to monitor market conditions.
Is this ETF for you?
iShares Core Cash ETF (BILL) is for investors who:
Want a low risk investment with capital stability.
Need liquidity for short term goals.
Want a steady income with minimal volatility.
Looking for a low cost alternative to traditional cash management.
UBS AUD Money Market Fund P-acc
UBS AUD Money Market Fund P-acc is a secure low risk investment to generate short term income, provide liquidity and capital stability. For conservative investors who want consistent returns.
Managed by UBS, the fund benefits from their global expertise. It’s a stable investment with easy access to your money and consistent income.
Good for those who want financial stability with no market risk. Diversified and conservative strategy so performance is reliable and good for steady income with minimal volatility.
UBS AUD Money Market Fund P-acc Key Facts
UBS AUD Money Market Fund P-acc is designed to generate consistent returns with capital preservation and liquidity. It invests in high quality short term fixed income securities for conservative investors.
Fund Name: UBS AUD Money Market Fund P-acc
APIR Code: UBS0004AU
Fund Inception Date: 15 Jan 2005
Fund Size: $850m (as at 31 Dec 2024)
Entry/Exit Price: $1.0002 (as at now)
Management Fee: 0.20% pa
Distributions: Monthly
The fund’s goal is to generate stable income with liquidity and low risk. Conservative asset allocation means low volatility so good for capital protection.
Performance
Performance is important for any investment. UBS AUD Money Market Fund P-acc has delivered stable income returns with capital stability and low growth.
UBS AUD Money Market Fund P-acc Returns (as at 31 Dec 2024)
Asset Allocation
UBS AUD Money Market Fund P-acc is a conservative asset allocation strategy with focus on liquidity, low risk and capital preservation. The fund aims to generate steady income through short term high quality securities.
How We Invest Your Money
UBS AUD Money Market Fund P-acc is a conservative investment approach with high quality short term debt securities to maintain liquidity, capital preservation and generate steady returns. Key features:
Diversification: The fund is diversified across various high quality short term securities to reduce risk and provide stability to investors.
Credit Quality: Investments are in investment grade securities to ensure strong credit ratings and minimal risk of defaults or downgrades.
Short Term: Short term instruments to reduce interest rate risk.
Liquidity Focus: A significant portion of the fund is in cash and near cash instruments to be liquid.
Fees and Charges
UBS AUD Money Market Fund P-acc is a cost effective structure for investors.
Management Fee: 0.20% pa, low cost access to liquidity and steady returns for conservative investors.
No Performance Fees: No performance fees, so you keep more of your returns.
Low Transaction Costs: The fund is passively managed to reduce transaction costs.
Why Invest in UBS AUD Money Market Fund P-acc
Here are some of the benefits:
Capital Protection: The fund maintains a stable NAV to protect capital and generate income for investors.
High Liquidity: Easy access to your money, good for short term needs, flexible and quick withdrawals.
Regular Income: Monthly distributions for a regular income stream, cash flow and stability over time.
Low Fees: Competitive management fees to give you more net returns, good for cost conscious investors looking for efficient solutions.
Diversification: Exposure to high quality short term securities to reduce risk.
Drawbacks
While the fund has many benefits, there are some downsides:
Lower Returns than Equities: As a conservative investment, the fund returns are lower than equities, limited long term growth.
No Growth: Primarily income focused, no capital growth, not suitable for aggressive wealth creation strategies.
Interest Rate Risk: Fund performance may be affected by interest rate changes, so keep an eye on the broader economy.
Is this fund for you?
UBS AUD Money Market Fund P-acc is for investors who:
Want a low risk, stable investment to preserve capital.
Need liquidity for short term needs.
Want regular income with minimal market risk.
Want a better return than traditional savings accounts.
FAQs
What is a money market fund?
A money market fund is a type of mutual fund that invests in short term, high quality debt securities. They provide liquidity, capital protection and regular income.
The main aim of money market funds is to be safe and stable with modest returns. They invest in short term instruments like Treasury bills, commercial paper and certificates of deposit.
Money market funds are for conservative investors looking for low risk investments. They have low volatility and are designed to protect capital and be liquid when you need access to your money.
How do money market funds work in Australia?
In Australia, money market funds work by pooling investor money to invest in short term debt instruments. They focus on protecting capital and providing regular income and liquidity.
Australian money market funds invest in high quality, low risk securities with short maturities. They aim to give steady returns without exposing investors to market risk or credit risk.
They are managed by big financial institutions, a safe investment option for investors who need liquidity and stability. Returns from money market funds come from interest income.
What do Australian money market funds invest in?
Australian money market funds invest in short term, low risk debt instruments like Treasury bills, bank bills, commercial paper and certificates of deposit. These assets give steady income with minimal risk.
Funds may also invest in repurchase agreements and other liquid securities issued by stable institutions. The aim is to be liquid and give competitive returns to investors.
They focus on capital protection and invest in government backed securities or investment grade corporate debt to minimize credit risk and be liquid.
Are money market funds in Australia low risk?
Yes, money market funds in Australia are low risk. They invest in short term, high quality debt instruments which are less volatile than equities or long term bonds.
They focus on capital protection and liquidity, with investments in highly rated securities. Not risk free but lower credit and market risk than more aggressive investments.
But they are not risk free. Interest rate changes and economic conditions can affect returns, but the risk is minimal compared to other asset classes.
What are the returns on Australian money market funds?
Returns on Australian money market funds are 1% to 3% per annum depending on market conditions and quality of assets. These returns are stable.
Returns are from interest income earned on short term debt instruments. The funds aim to give steady, if modest returns with low risk, so suitable for conservative investors.
Since money market funds invest in low risk securities, the returns are lower than more aggressive investments. But their predictability and stability makes them a good option for income focused investors.
How do money market funds differ from high interest savings accounts?
Money market funds differ from high interest savings accounts in that they invest in short term securities, while savings accounts earn interest based on bank deposit rates.
High interest savings accounts are insured up to a certain amount, money market funds are not government backed but they have lower risk due to their diversified investment strategy.
The difference is in returns and accessibility. Money market funds give higher returns but slightly less liquidity, savings accounts give guaranteed access and interest but lower returns.
Are money market fund investments in Australia government guaranteed?
No, money market fund investments in Australia are not government guaranteed. Unlike bank deposits, these funds do not have a formal government backed protection scheme.
Investors should be aware that while the funds invest in high quality securities, they are still subject to the performance of the underlying assets which may fluctuate with market conditions.
But the funds are managed for safety and stability, they invest in low risk, highly liquid securities so even without government backing there is minimal loss.
What are the fees for money market funds?
Money market funds charge a management fee which is usually 0.10% to 0.50% per annum. This fee covers the cost of managing the fund’s investments and operations.
Some funds may also charge entry or exit fees but these are less common in money market funds. Always review the fund’s fee structure.
Investors should also be aware of indirect costs such as the bid-ask spread which can affect returns. Overall money market funds have lower fees than actively managed funds.
How do I invest in a money market fund in Australia?
You can invest in a money market fund in Australia through a financial institution such as a bank, broker or directly with fund managers who offer these funds.
Many Australian fund managers offer online platforms where you can open an account, deposit funds and start investing in money market funds. It’s easy and quick.
Before you invest, make sure you understand the fund’s objectives, fees and risk profile. It’s also recommended to consult a financial advisor to ensure it aligns with your investment goals.
What is the minimum investment for money market funds?
The minimum investment for money market funds in Australia is usually $1,000 to $5,000 depending on the fund provider. Some funds may have lower or higher requirements.
While these funds are accessible, the minimum investment ensures the fund can diversify its holdings. It also helps maintain liquidity and manage transaction costs.
Check with the fund provider for the exact minimum investment as it may vary. Some funds may also allow smaller investments through regular contributions.
Can I get my money back at any time when invested in a money market fund?
Yes, one of the benefits of money market funds is their liquidity. You can generally get your money back at any time without incurring significant penalties or delays.
But note that some funds may require a notice period before withdrawal. In extreme cases, funds may impose redemption fees or restrictions during market turbulence.
In summary, money market funds are meant to be easy access to funds so they are good for short term savings or emergency funds.
How are money market fund returns taxed in Australia?
Money market fund returns in Australia are taxed as income. The income earned, such as interest or distributions is taxed at the investor’s marginal tax rate.
Investors who receive income from these funds may need to include it in their annual tax return. Tax treatment depends on individual circumstances and type of income received.
Investors should keep track of distributions and seek advice from a tax professional to get the best tax outcome. Some funds provide tax statements to help with this.
What are the risks of money market funds?
While money market funds are low risk, they’re not risk free. Interest rate changes can affect returns and there is a risk of credit defaults in extreme cases.
Liquidity risk is minimal as the funds invest in short term high quality securities. Market volatility or economic downturn may impact the fund’s ability to deliver stable returns.
And inflation risk to consider as returns may not keep pace with rising living costs especially during low interest rate periods. Risk is generally lower than other investments.
How do I pick the right money market fund for me?
Picking the right money market fund involves looking at fees, returns, investment strategy and credit quality of underlying assets. Compare the options.
Look for funds with low management fees, consistent returns and strong credit ratings for underlying securities. Also consider the fund’s liquidity and distribution frequency to match your cash needs.
Check the fund’s performance and investment strategy to ensure it suits your risk tolerance and investment goals especially if you’re looking for safety and stability.
Are there ethical or sustainable money market funds in Australia?
Yes, there are ethical or sustainable money market funds in Australia though they may be fewer than traditional ones. These funds invest in assets with positive environmental, social or governance impact.
Some fund managers integrate ESG (Environmental, Social, Governance) into their investment process so only companies with good practices are included. These funds often prioritise sustainability.
Before you invest, check the fund’s specific criteria to make sure it aligns with your values. Sustainable money market funds may have slightly different return profiles due to screening.
How do Australian money market funds compare to international ones?
Australian money market funds are similar to international funds in that they invest in short term low risk debt instruments. But there are differences in the types of assets and regulatory frameworks.
International funds may invest in a wider range of global securities and offer diversification across different countries and currencies. This may expose investors to currency risk but also extra growth.
Australian money market funds invest in local securities so you get stability and familiarity. International funds may have higher returns as they have access to global markets and opportunities.
What is the role of money market funds in a diversified portfolio?
Money market funds play a key role in a diversified portfolio by providing liquidity, stability and capital preservation. They are a safe haven during market volatility.
These funds balance riskier investments like equities or bonds by offering a low risk option with easy access to cash. They help manage overall portfolio risk.
For conservative investors money market funds are the foundation for a steady income stream and capital preservation especially for short term savings or as part of a broader asset allocation.
How often do money market funds pay interest or distributions?
Money market funds in Australia pay interest or distributions monthly. This regular payout allows investors to get a steady income.
Distributions are generally from the interest income earned from the short term securities in the fund’s portfolio. Investors can reinvest the distributions or take them as cash.
Check the fund’s distribution frequency before you invest as some funds may pay quarterly or annually depending on their structure.
Can money market funds go down in value?
While money market funds are designed to preserve capital, they’re not risk free and can go down in value in extreme market conditions. Factors like interest rate changes and credit defaults can affect returns.
During market stress or economic uncertainty even high rated short term securities can move in value, impact the fund’s performance. But this is rare.
In summary money market funds are one of the lowest risk investments but investors should be aware of short term fluctuations especially during economic turmoil or rising interest rates.
Where can I find reviews and ratings of Australian money market funds?
Reviews and ratings of Australian money market funds can be found on independent financial research websites, investment platforms and ratings agencies like Morningstar or Chant West.
These platforms provide detailed reports on returns, risk and fund management so you can compare different funds. They also give you insight into the fund’s performance history and fees.
Check fund manager’s website or your financial advisor for fund performance data. Check regularly.
Originally Published: https://www.starinvestment.com.au/best-money-market-funds-australia-2025/
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