Money market funds, as their name indicates, were invested originally on the money market, in short term deposits or other financial instruments with equivalent types of interest, so that the interest risk 'should' be minimal. However, sizeable falls in the prices of these funds too have resulted from the series of interest rate rises since the autumn of 2003, so that they have come to resemble short term bond funds, rather than money market funds. The analysis compares the interest risk assumed by the forint based money market funds and the performance attained in the period between January 1, 2003 and October 5, 2005. It is found that the interest risk of the money market funds shows a very wide dispersion, with some varying over time as well, and others whose scale of risk means they cannot be classed as money market funds at all. There is also a significant spread found in the performance of certain funds compared with the reference portfolio.
Financed by the National Centre for Research and Development under grant No. SP/I/1/77065/10 by the strategic scientific research and experimental development program:
SYNAT - “Interdisciplinary System for Interactive Scientific and Scientific-Technical Information”.