About the Fund

SB Peso Money Market Fund (Formerly “SB Peso Ease Fund”) aims to achieve short term growth by
investing mainly in bank and government deposits in short-term fixed income instruments and all
other instruments approved by the BSP. The Fund aims to surpass its benchmark (gross of fees)
which is 100% Philippine 30-Day Average Special Savings Account Rate (net of withholding tax).

We will be changing our Fund’s custodian from HSBC to Standard Chartered as part of our
continuous efforts in finding the best rates for our customers. The shift shall lower our fund
administration costs, ultimately boosting the returns of our Funds. This will be reflected in the KIDS
as of April 2019.

There are changes to the SB Peso Money Market Fund. Click here to read the full update.

Client Suitability
SB Money Market Fund is suitable only for investors who:

 Have a moderately conservative risk tolerance

 Seek capital preservation
 Have an investment horizon of six (6) months to one (1) year

The Sun Life Prosperity Money Market Fund is ideal for:

RISK TOLERANCE: Low

INV ESTMENT HORIZON: Short Term

Sun Life Prosperity Money Market Fund reports:

The Sun Life Prosperity Money Market Fund presents the least risk amongst all funds,
however, with the lowest possible returns. In retrospect, this Fund provides higher annual returns
than your bank savings account and doesn’t impose any sales load on you.
The Sun Life Prosperity Money Market Fund is for you if:
 You want to have very low risk in your investment, but potentially earn better than regular
current, savings, or time deposits.
 Don’t want to look too far into the horizon? Money Market Funds are beneficial as early as one
year from date of investment.
 You're considering time deposits or opening a new savings account but are wondering if there are
better options.

BPI Money Market Fund

This investment fund intends to achieve for its participants liquidity and stable income derived from a
diversified portfolio of primarily short-term fixed income instruments. It is suitable for investors with at
least a moderately conservative risk profile. The Fund aims to provide excess return over the return of
the 91-day Philippine Treasury Bill, net of tax. This Fund is available under the Regular Subscription
Plan

Fund Name   BPI Money Market Fund

Base Currency   Philippine Peso

Launch Date   August 1, 2013

Minimum Initial Investment   PhP 10,000

Minimum transaction amount   PhP   1,000

Minimum Holding Period   NONE

Trust Fee   0.25% p.a.

Valuation of the Fund   Marked-to-Market Daily

Money Market Funds

Money market funds are ideal for newbie and conservative investors who want to earn a
little higher than time deposits. They’re the best investments for capital preservation in
one year or less. The funds are invested in corporate bonds, government treasury bills,
and other risk-free, short-term securities.

Money market funds are mutual funds that invest in the money markets, meaning
debt securities of a short-term nature, such as U.S. Treasury bills. If you imagine
that people buy and sell stocks in the stock market, it's easier to see how people
buy and sell money in the money markets in the form of shares.

Similar to your deposit accounts at the bank, money market funds take your
money and invest it. Then, they pay a portion of their earnings to you in the form
of dividends. Money market funds usually pay a monthly dividend, but some
alternatives also exist. A money market fund is not the same as a money market
account at a bank or credit union.

Money market funds are a popular and useful cash management tool in the right
circumstances. Before you use money market funds, make sure you understand
how they work and the risks you might be taking.

Money Market Funds Investments

These funds invest in short-term instruments that mature in less than 13 months
at a maximum. By keeping a short time frame, these funds attempt to reduce
risk. In fact, the SEC reports that the average maturity of all the investments in a
money market fund must be less than 90 days.

The longer you loan money, the greater the risk that something could happen
and it won’t be paid back. Typical investments inside a money market fund might
be US Treasury issues, short-term corporate paper, and CDs that present an
extremely low risk of default.

Why Use Money Market Funds

Investors who want a decent return from a relatively safe investment use money

market funds. If your portfolio is invested in suddenly-volatile markets, you can
pull out your money and park it in a money market fund. Although the returns
may be in the low single digits, it's a very low-risk place to keep your money in a
down market.

Investments in money market funds are typically liquid, meaning you can usually
get your money out within a few business days. You can also take advantage of
rising interest rates by keeping your money in an investment that will adjust to the
markets.

A lot of institutions allow you to write checks to withdraw your funds from a
money market fund. Therefore, you get the advantages of dividend earnings as
well as easy access to your cash. Make sure you ask what restrictions or fees
your institution has.
The Risks of Money Market Funds

There are several risks that are worth highlighting. First, a money market fund
is technically a security. The fund managers attempt to keep the share price
constant at $1/share. However, there is no guarantee that the share price will
stay at $1/share. If the share price goes down, you can lose some or all of your
principal.

The U.S. Securities and Exchange Commission notes that “While investor losses

in money market funds have been rare, they are possible.” In return for this risk,
you should earn a greater return on your cash than you’d expect from an FDIC
insured savings account.

This leads to the next risk, which is that money market funds are not FDIC
insured. If you keep money in a regular bank deposit account, such as savings
or checking, your bank provides FDIC insurance for up to $250,000. Although
money market funds are extremely safe, there is still a small element of risk that
you could lose money, without any government entity to cover your losses.

Next, money market fund rates are variable. In other words, you don’t know
how much you’ll earn on your investment next month. The rate could go up or
down. If it goes up, that may be a good thing. However, if it goes down and you
earn less than you expected, you can end up needing more cash. This is the
same as other securities investments but is still worth noting if you're looking for
dependable and predictable returns on your funds.

A final risk that comes with money market funds has to do with opportunity
costs and inflation. Because money market funds are considered to be safer
than other investments like stocks, long-term average returns on money market
funds tend to be less than long-term average returns on riskier investments. For
example, common stock returns average out to 8 percent to 10 percent over
time, while money market mutual funds come in at only 2 percent to 3 percent on
average. Over long periods of time, inflation can eat away at your returns, and
you might be better served with higher-yielding investments.

Where to Get a Money Market Fund

When it comes to money market funds, you have choices. They are easy to find
at brokerage houses and mutual fund companies—your free cash is sometimes
swept into a money market fund automatically. Check your bank as well, since
banks have also been offering money market funds to their customers since they
received regulatory permission in 1982.
The best place to find out more details about a money market fund is the fund's
prospectus. You should always read one of these before buying any fund, and
you can learn a lot by reading the prospectus from several different funds.

 Certificate of deposit – Time deposit, commonly offered to consumers by banks, thrift

institutions, and credit unions.
 Repurchase agreements – Short-term loans—normally for less than one week and frequently
for one day—arranged by selling securities to an investor with an agreement to repurchase them
at a fixed price on a fixed date.
 Commercial paper – Short term instruments promissory notes issued by company at
discount to face value and redeemed at face value
 Eurodollar deposit – Deposits made in U.S. dollars at a bank or bank branch located outside
the United States.
 Federal agency short-term securities – In the U.S., short-term securities issued
by government sponsored enterprises such as the Farm Credit System, the Federal Home Loan
Banks and the Federal National Mortgage Association. Money markets is heavily used function.
 Federal funds – In the U.S., interest-bearing deposits held by banks and other depository
institutions at the Federal Reserve; these are immediately available funds that institutions
borrow or lend, usually on an overnight basis. They are lent for the federal funds rate.
 Municipal notes – In the U.S., short-term notes issued by municipalities in anticipation of tax
receipts or other revenues
 Treasury bills – Short-term debt obligations of a national government that are issued to
mature in three to twelve months
 Money funds – Pooled short-maturity, high-quality investments that buy money market
securities on behalf of retail or institutional investors
 Foreign exchange swaps – Exchanging a set of currencies in spot date and the reversal of
the exchange of currencies at a predetermined time in the future
 Short-lived mortgage- and asset-backed securities

Money market instruments are securities that provide businesses, banks, and the
government with large amounts of low-cost capital for a short time. The period is
overnight, a few days, weeks, or even months, but always less than a year.
The financial markets meet longer-term cash needs.

Businesses need short-term cash because payments for goods and services sold
might take months. Without money market instruments, they'd have to wait until
payments were received for goods already sold. This would delay the purchases
of the raw goods and slow down the manufacturing of the finished product.

Businesses also use money market instruments to invest extra cash. It will earn a
little interest until it needs to pay its fixed operating costs. These include rent,
utilities, and wages.
Money market instruments allow managers to get cash quickly when they need it.
For that reason, money market instruments must be very safe.

For example, the stock market is too risky. Prices might have fallen by the time
the firm needs to pay bills.

Money markets must also be easy to withdraw at a moment's notice. They can’t
have large transaction fees. Otherwise, the business would just keep extra cash
in a safe. There is $883 billion in money market instruments issued throughout
the world, according to the Bank for International Settlements. 

Many of these instruments of the money market are part of the U.S. money

supply. This includes currency, check deposits, as well as money market funds,
certificates of deposit, and savings accounts. The size of the money supply
affects interest rates, consequently influencing economic growth.

Types of Money Market Instruments

There are 15 types of money market instruments. Each meets the specific needs
of the different customers.

Commercial Paper: Large companies with impeccable credit can simply issue
short-term unsecured promissory notes to raise cash. Asset-backed commercial
paper is a derivative based upon commercial paper. This is the most popular
money market instrument with $521 billion issued worldwide, according to the
Bank for International Settlements.

Federal Funds: Banks are the only businesses that use federal funds. Banks
use them to meet the Federal Reserve requirement each night. It's roughly 10%
of all bank liabilities over $58.8 million. A bank without enough cash on hand to
meet the requirement will borrow from other banks. The federal funds rate is the
interest banks charge each other to borrow fed funds. The current fed funds
rate dictates all other short-term interest rates.

Discount Window: If a bank can't borrow fed funds from another bank, it can go
to the Fed's discount window. The Fed intentionally charges a discount rate that's
slightly higher than the fed funds rate. It prefers banks to borrow from each
other. Most banks avoid the discount window, but it's there in case of emergency.

Certificates of Deposit: Banks issue certificates of deposit to raise short-term

cash. Their duration is from one to six months. The CDs pay the holder higher
interest rates the longer the cash is held.
Eurodollars: Banks also issue CDs in foreign banks. These are held
in euros instead of U.S. dollars. 

Repurchase Agreements: Banks raise short-term funds by selling securities but

promising at the same time to repurchase them in a short period of time. This
often means the next day with a little added interest. Even though it's a sale, it's
booked as a short-term collateralized loan. The buyer of the security, who is
actually the lender, executes a reverse repo. 

Bankers Acceptances: This works like a bank loan for international trade. The

bank guarantees that one of its customers will pay for goods received, typically
30 - 60 days later. For example, an importer wants to order goods, but the
exporter won't give him credit. He goes to his bank which guarantees the
payment. The bank is accepting the responsibility for the payment.

Swaps: Banks act as middlemen for companies that want to protect themselves
from changes in interest rates. 

Backup Line of Credit: A bank will guarantee to pay 50% to 100% of the money
market instrument if the issuer does not.

Credit Enhancement: The bank issues a letter of credit that it will redeem the
money market instrument if the issuer does not. 

Treasury Bills: The federal government raises operational cash by issuing bills
in the following durations: 4 weeks, 13 weeks, 26 weeks, and one year. 

Municipal Notes: Cities and states issue short-term bills to raise cash. The
interest payments on these are exempt from federal taxes.

There are also investments based on money market instruments.

Shares in Money Market Instruments: Money market funds, other short-term

investment pools in banks, and the government combine money market
instruments and sell shares to their investors. 

Futures Contracts: These contracts obligate traders to either buy or sell a

money market security at an agreed-upon price on a certain date in the future.
Four instruments are typically used: 13-week Treasury bills, three-month euro
time deposits, one-month euro time deposits, and a 30-day average of the fed
funds rate. 
Futures Options: Traders can also buy just the option, without an obligation, to
buy or sell a money market futures contract at an agreed-upon price on or before
a specified date. There are options on three instruments: three-month Treasury
bill futures, three-month euro futures, and one-month euro futures. 

Role of Money Market Instruments in the Financial Crisis

Since money market instruments are generally so safe, it came as a surprise to

most that they were at the heart of the 2008 financial crisis. In fact, the Fed had
to create many new and innovative programs to keep the money market running.

They were created quickly, so the names described exactly what they did in
technical terms. This may have made sense to bankers but very few others. The
hyperlinks of these programs will take you to their respective sites which discuss
them in detail:

  Money Market Investor Funding Facility,

 Term Auction Facility,
 Commercial Paper Funding Facility,
 Term Auction Lending Facility,
 Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity
Facility, and the
 Primary Dealer Credit Facility.

Although these tools worked well, they confused the general public. The
complexity created mistrust about the Fed's intentions and actions. Now that
the financial crisis is over, these tools are no longer needed and have been
discontinued.

What It Means to You

You can take advantage of the liquidity of many money market instruments. You
can get money market mutual funds, Treasury bills, Treasury bill mutual funds,
and municipal note mutual funds from your broker. You can also buy Treasury
bills directly from the U.S. Treasury if you intend to hold them until maturity.

You can purchase CDs from a bank. You can purchase futures contracts from a
brokerage. You can trade futures options at a financial services company or
broker.

Some of these instruments will protect you during rising interest rates. Look for
savings products with variable interest rates that will rise along with rates. These
include money market mutual funds, short-term CDs, and Treasury bills.
While we’re on the topic, you can also get savings accounts and money market
accounts from your bank. These aren’t based on money market instruments.
Instead, they are interest-bearing accounts issued by your bank. These accounts
are insured by the Federal Deposit Insurance Corporation, unlike money market
mutual funds.

Avoid fixed income investments that are locked in for a month or more. These

include CDs, and Short-term Bond Funds. Both only pay the same low rate over
time. As interest rates rise, their values fall. For the same reason, avoid any long-
term bond funds. Only use them to diversify your portfolio and reduce risk. 

Features of Money Market Instruments

 Liquidity: They are considered highly liquid as they are fixed-income securities which carry
short maturity periods of a year or less.
 Safety: Since the issuers of money market instruments have strong credit ratings, it
automatically means that the money instruments issued by them will also be safe.
 Discounted price: One of the main features of money market instruments is that they are
issued at a discount on their face value.

Functions of Money Market Instruments

Provides Funds
The Money Market Instruments help to provide short-term funds to the private and public institutions
who need finance for their working capital requirements. These funds are provided by discounting
the trade bills through commercial banks, brokers, discount houses, and acceptance houses.
Therefore, the money market instruments, in turn, can help the development of trade, industry and
commerce within and outside the country.
Use of Surplus Funds
Money market instruments provide opportunity to the banks and financial institutions to use their
surplus funds profitably for a small period of time. They include commercial banks as well as large
non-financial corporations, states and other local governments.

No need to borrow from banks

In case of a developed money market, there is no need to borrow money from commercial and
central bank. However, if there is a short of cash requirement, they can call in some of their loans
from the money market. Also, the most of the commercial banks would rather prefer to recall their
loans than recalling it from the central banks at a higher rate of interest.

Helps Government
The money market instruments prove helpful to the government in borrowing short-term funds on the
basis of treasury bills at low interest rates. Besides, it would lead to inflationary pressures in the
economy if the Government had to issue paper money or borrow from the central bank.

Helps in Monetary Policy

The existence of a well-developed money market will help in successfully implementing the
monetary policies of central bank. Is only through money market the central banks can control the
banking system and therefore Influence commerce and the industry.

Helps in Financial Mobility

The Monet market helps in financial stability by smoothening the transfer for funds from one sector
to another. And, financial mobility is important for the development of commerce and industry.

Promotes Liquidity and Safety

Apart from encouraging savings and investments, the money market instruments promote liquidity
and safety of financial assets.

Equilibrium between Demand and Supply of Funds

The money market brings a balance between the demand and supply of loanable funds by allocating
saving into investment channels.
Economy in Use of Cash
The money market instruments deal with assets which are not cash but equivalent to cash and thus
help in economizing the use of cash. And hence it can be considered as a convenient way to
transfer funds from one place to another.

Important Objectives of Money Market

Instruments
Following are the objectives of served by a money market:

 The money markets not only help in the storage of short-term surplus funds but also help in
lowering short term deficits.
 Money markets helps the central bank in regulating liquidity in the economy.
 Money market assists the short-term fund users to fulfill their needs at a very reasonable
rate.
 It helps in the development of capital market and trade and industry.
 Money markets help in designing effective monetary policies.
 It also facilitates in streamlined functioning of commercial banks.

Instruments of the Money Market

Following are the types of Money Market Instruments:

Promissory Note:
A promissory note is one of the earliest type of bills. It is a financial instrument with a written promise
by one party, to pay to another party, a definite sum of money by demand or at a specified future
date, although it falls in due for payment after 90 days within three days of grace. However,
Promissory notes are usually not used in the business, but USA is an exception.
Bills of exchange or commercial bills
The bills of exchange can be compared to the promissory note; besides it is drawn by the creditor
and is accepted by the bank of the debater. The bill of exchange can be discounted by the creditor
with a bank or a broker. Additionally, there is a foreign bill of exchange which becomes due for
payment from the date of acceptance. However, the remaining procedure is the same for the internal
bills of exchange.

Treasury Bills (T-Bills)

 The Treasury bills are issued by the Central Government and known to be one of the safest
money market instruments available. Besides, they carry zero risk, so the returns are not
attractive. Also, they come with different maturity periods like 1 year, 6 months or 3 months
and are also circulated by primary and secondary markets. The central government issues
them at a lesser price than their face-value.
 The difference of maturity value of the instrument and the buying price of the bill, which is
decided with the help of bidding done via auctions, is basically the interest earned by the
buyer.
 There are three types of treasury bills issued by the Government of India currently that is
through auctions which are 91-day, 182-day and 364-day treasury bills.

Call and Notice Money

Call and Notice Money exist in the market. With respect to Call Money, the funds are borrowed and
lent for one day, whereas in the Notice Market, they are borrowed and lent up to 14 days, without
any collateral security. The commercial banks and cooperative banks borrow and lend funds in this
market. However, the all-India financial institutions and mutual funds only participate as lenders of
funds.

Inter-bank Term Market

The inter-bank term market is for the cooperative and commercial banks in India who borrow and
lend funds for a period of over 14 days and up to 90 days. This is done without any collateral
security at the rates determined by markets.
Commercial Papers (CPs)
 Commercial papers can be compared to an unsecured short-term promissory note which is
issued by top rated companies with a purpose of raising capital to meet requirements directly
from the market.
 They usually have a fixed maturity period which can range anywhere from 1 day up to 270
days.
 They offer higher returns as compared to treasury bills. They are automatically not as secure
in comparison. Also, Commercial papers are traded actively in secondary market.

Certificate of Deposits ( CD’s )

 This functions as a deposit receipt for money which is deposited with a financial organization
or bank. The Certificate of Deposit is different from a Fixed Deposit receipt in two ways. i.
Certificate of deposits are issued only of the sum of money is huge. ii. Certificate of deposit is
freely negotiable.
 The RBI first announced in 1989 that the Certificate of Investments have become the most
preferred choice of organization in terms of investments as they carry low risk whilst
providing high interest rates than the Treasury bills and term deposits.
 CD’s are also issued at discounted price like the Treasury bills and they range between a
span of 7 days up to 1 year.
 The Certificate of Deposit issued by banks range from 3 months, 6 months and 12 months.
 Note: CD’s can be issued to individuals (except minors), companies, corporations, funds,
non–resident Indians, etc.

Banker’s Acceptance (BA)

 A Banker’s Acceptance is a document that promises future payment which is guaranteed by
a commercial bank. Also, it is used in money market funds and will specify the details of
repayment like the date of repayment, amount to be paid, and details of the individual to
which the repayment is due.
 BA’s features maturity periods that range between 30 days up to 180 days.
Repurchase Agreements (Repo)
 Repo’s are also known as Reverse Repo or as Repo. They are loans of short duration which
are agreed by buyers and sellers for the purpose of selling and repurchasing.
 However, these transactions can be carried out between RBI approved parties.
 Note: Transactions can only be permitted between securities approved by RBI like the
central or state government securities, treasury bills, central or state government securities,
and PSU bonds.