Invest in money? The idea seemed absurd a few months ago, given the zero or even negative return on this type of investment. But the situation has changed, monetary funds are regaining color! They are now posting an average monthly performance that is once again positive, since August 2022according to statistics published by the Banque de France (at 0.05% for the month of October, according to latest figures published).
Nothing illogical: their portfolios are mainly composed of debt securities issued over a period of less than one year by States (Treasury bills), financial institutions (certificates of deposit) and companies (commercial paper) . However, the remuneration of these securities is indexed to the level of the key rates of the European Central Bank (ECB). Rates that have – finally – taken off…
To curb the inflationary spiral, since the summer of 2022, the ECB has gradually raised its refinancing rates zero to 2.5%. And this monetary tightening should continue in the months to come, warned in December 2022 Christine Lagarde, President of the ECB. In question, always: the level of inflation in the euro zone. For December, it is estimated at 9.2% at an annual rate by Eurostatthe statistical office of the European Union.
A context that should benefit money market funds. “For 2023, we can reasonably expect an annual remuneration of between 2.5% and 3%, with a risk of almost zero capital loss”, believes Rémi Duran, manager at Palatine AM. Therefore, while “Money market funds are generally intended to secure cash or savings awaiting investment, they now constitute an alternative to the guaranteed capital euro funds of life insurance contracts, in terms of remuneration”he notes.
A sign of a return to favor with investors, this fund category has experienced record inflows in recent months (41 billion euros in November 2022 at European level), according to a research note from Morningstar.
According to the professionals interviewed, it is in particular managers who take extra-financial criteria into account in their investment decisions, in this case environmental, societal and governance (ESG) criteria, which are currently favored by investors. , keen to invest responsibly.
Admittedly, more and more money market fund managers are integrating an ESG approach into their management process, by excluding certain issuers from their investment universe, such as companies involved in the production of weapons, gambling, tobacco or fossil fuels, but also States that do not have a sufficient legislative and social framework for the development of democracy.
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