How to Choose the Right Money Market Fund for Your Business

A money market fund (MMF) is a low-risk, highly liquid unit trust (mutual fund) that invests in short-term, high-quality debt instruments. These funds serve as a relatively safe, flexible cash management tool for businesses to earn better returns.

There are many money market funds in the market, and while they all look similar on the surface, looking under the hood will present more information that corporate treasurers should look into when evaluating money market funds to suit their needs.

For corporate treasurers, selecting a money market fund (MMF) is fundamentally about protecting principal, ensuring liquidity, and optimizing risk-adjusted returns—in that order. Here are the key considerations, distilled into how treasury teams actually make decisions.

Stability before Yield (Non-negotiable)

For corporate cash management, the goal is not to maximise returns at all costs. A quality MMF seeks to provide competitive yields while maintaining a high degree of stability and liquidity, helping businesses manage cash with confidence.

What to assess:

• Credit quality of underlying assets
• Look at the Fund’s exposure to:
• Government securities (lowest risk)
• Bank deposits
• Corporate issuers
• Historical NAV stability (any past volatility?)

👉 A higher yield often signals higher credit or duration risk—which may not be appropriate for core treasury cash. Very often one has to look into the underlying assets, some MMFs invest purely in fixed deposits and treasury bills while some do invest in corporate short term notes bonds which carry higher credit risks and therefore subject the fund to potentially higher volatility. At Aspire, our carefully selected funds for Aspire Yield invests only in treasury bills, fixed deposits and high grade corporate issuers, which are subject to minimum short term credit rating.

Liquidity Profile (Match to cash needs)

Treasurers must ensure cash is available when needed.

Key factors:

• Settlement cycle (T+0, T+1)
• Redemption terms (lookout for any gating of redemption in the prospectus)
• Daily and weekly liquidity buffers

Typical best practice:

• Use same-day or T+1 liquidity funds for operating cash. To reduce the possibility of redemption gating, look for funds that have larger fund sizes as these funds are likely to have a larger pool of both retail and institutional investors. In addition, a MMF with larger fund size will be able to accommodate larger withdrawals without needing to impose any redemption gate.

Portfolio Composition & Transparency

Not all MMFs are equal—even if they look similar.

Corporate treasurers should review:

• Breakdown of holdings:
• % in deposits vs securities
• % in corporate vs sovereign
• Top issuers (concentration risk)
• Geographic exposure

👉 For corporate treasury, what sits inside a liquidity fund matters as much as the yield it prints. Treasurers generally favour funds built on short-dated, high-quality instruments — government securities, bank deposits, repos and high-grade commercial paper — over funds taking on broader, longer-dated credit to lift returns.

That shapes how Aspire selects its underlying funds. Aspire HKD Yield uses the Taikang HKD Money Market Fund, which invests principally in bank deposits. Aspire USD Yield uses the Franklin U.S. Dollar Short-Term Money Market Fund, which holds US Treasury bills, repos and commercial paper from high-grade financial institutions.

Duration & Interest Rate Risk

While sensitivity to interest rates is typically low, MMFs nevertheless still carry some sensitivity to interest rate movements.

Key metrics:

• Weighted Average Maturity (WAM)
• Weighted Average Life (WAL)

Implications:

• Shorter duration → more stable NAV
• Longer duration → slightly higher yield but more fluctuation

Yield (but always risk-adjusted)

It seems counterintuitive but for corporate funds, Yield should be evaluated last, not first.

What to compare:

• Net yield (after fees)
• Yield consistency (not just headline rate)
• Source of yield:
• Credit risk?
• Duration positioning?

⚠️ MMFs are not guaranteed—unlike fixed deposits. As such, it is more common for corporate treasurers to select a money market fund that has the lowest credit risk and a shorter duration profile, although such funds tend to have lower yield.

Regulatory Structure & Safeguards

In Hong Kong, money market funds are governed by Chapter 8.2 of the SFC's Code on Unit Trusts and Mutual Funds, which prescribes strict requirements on credit quality, maturity, diversification, and permissible instruments. This regulatory framework ensures that SFC-compliant MMFs are structured to invest in short-term and high quality money market investments and seeks to offer returns in line with money market rates.

Hong Kong MMFs are subject to strict investment limitations under UT Code 8.2, typically:

• Maturity: weighted average maturity ≤60 days; weighted average life ≤120 days; no instrument maturing beyond 397 days (2 years for government securities)
• Liquidity: at least 7.5% of NAV in daily liquid assets and at least 15% in weekly liquid assets
• Diversification: usually max 10% per issuer ; max 20% per corporate group
• Credit quality: short-term deposits and high-quality money market instruments only
• Leverage: none
• Derivatives: hedging purposes only; material currency risk must be hedged
• Oversight: manager must conduct periodic liquidity stress testing

This reinforces that MMFs registered in Hong Kong are designed around high credit quality.

Fund Manager Strength & Track Record

Institutional-quality management is critical.

Corporate treasurers should assess fund managers on the following metrics:

• Experience managing liquidity funds
• Credit research capabilities
• Assets under management (AUM)
• Performance during stress periods

👉 Larger, established managers tend to have:

• Better issuer access and ability to negotiate better terms with bank deposits institutions
• Stronger risk controls

Taikang Asset Management (Hong Kong), established in 2007, is the offshore arm of Taikang Asset Management — one of China's established traditional asset managers, part of the Taikang Insurance Group, with over USD 647 billion in group AUM as at 30 June 2025. Its Kaitai HKD and USD Money Market Funds were SFC-authorised in 2021 and 2022, backed by the group's insurance-led credit and deposit franchise.

The Franklin U.S. Dollar Short-Term Money Market Fund has operated since 1994, giving it over thirty years of history across the global financial crisis, the zero-rate era, COVID and the 2022–23 hiking cycle. The fund invested in US treasuries, high-quality short-dated debt, commercial paper and certificates of deposit. Franklin Templeton manages US$1.79 trillion in assets as of June 30, 2026

Operational Fit

Very often overlooked by corporate treasurers, a fund must integrate smoothly into treasury operations.

Consider:

• Cut-off times for subscriptions/redemptions
• Ease of execution (platform, bank integration)
• Reporting (daily NAV, statements)
• Minimum investment size

👉 For corporates, operational friction can outweigh small yield gains. Aspire Yield integrates into the Aspire app and with minimum investment from $1, it gives corporate treasurers the flexibility and operational convenience when managing corporate treasury funds.

Simple Decision Framework

At Aspire, we suggest corporate treasurers to frame their evaluation process with these 4 questions.

• Is my principal safe? (credit quality, structure)
• Can I access my cash when needed? (liquidity)
• Does it fit operationally? (execution, reporting)
• What is the risk-adjusted yield?

Bottom Line

The “best” MMF for corporates is not the one with the highest yield—it’s the one that:

• Matches your liquidity needs
• Preserves capital with high certainty
• Integrates seamlessly into your treasury workflow