I want to know about if you money market funds reduce will your money you have gain earlier and your capital be reduced
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Have you ever been to the market, maybe Oshodi Market or Mile 12 Market, where you buy and sell different things like vegetables, clothes, or shoes? Imagine money market funds as a type of market where people can invest their money. Just like in the market, you put in your money and hope to get moreRead more
Have you ever been to the market, maybe Oshodi Market or Mile 12 Market, where you buy and sell different things like vegetables, clothes, or shoes? Imagine money market funds as a type of market where people can invest their money. Just like in the market, you put in your money and hope to get more in return later on.
Now, if the money market funds reduce, it means the amount of money you will get back could be less than what you put in. It’s like expecting to buy a big basket of tomatoes at the market and then finding out later that you can only get a small basket instead.
So, if you had gained some money earlier, and the money market funds reduce, you might end up with less money than you expected. Your original investment could also decrease, just like how the price of goods can go down at the market.
It’s important to keep an eye on your investments in money market funds and understand that the value can go up or down. If you notice a reduction, it’s essential to find out why and consider your options carefully. Just like Mama Ngozi carefully selects her ripe tomatoes at the market, you should also take care of your investments to help them grow properly. Remember, investing always carries some level of risk, so it’s wise to be informed and make decisions wisely.
See lessOne thing that would have cause the reduction is the latest MPR Yes. The key thing to understand is that a reduction in the MPR can eventually reduce the returns/yields you see from money market funds, but it does NOT normally take away the money you have already earned or reduce your original capitRead more
One thing that would have cause the reduction is the latest MPR
Yes. The key thing to understand is that a reduction in the MPR can eventually reduce the returns/yields you see from money market funds, but it does NOT normally take away the money you have already earned or reduce your original capital simply because the MPR was reduced.
As of September 22, 2026, the CBN reset the MPR from 26.5% to 23%. The CBN describes this as an operational realignment because the previous MPR had become disconnected from actual market rates.
Think of it like this:
Suppose you put:
₦100,000 — Money Market Fund
The fund manager invests your money mainly in things such as Treasury bills, fixed deposits and other short-term money-market instruments.
When interest rates are high:
High interest rates – fund can earn more – your fund’s yield can be higher.
When interest rates start falling:
Lower interest rates – new investments may earn less – the fund’s future yield can gradually fall.
That’s why a lower MPR can eventually affect money-market-fund returns.
But here is the important part
Let’s say your:
₦100,000 → ₦112,000
and then the MPR falls.
It does not mean:
₦112,000 → suddenly becomes ₦105,000 because MPR fell.
A falling MPR primarily affects the returns going forward, rather than automatically deleting the interest you’ve already accumulated.
There can be other reasons a fund’s NAV can fluctuate, though, because the fund owns actual securities whose values can change.
Why are people saying money-market returns are reducing?
Because the interest rates on the instruments that money-market funds invest in can also move downward.
For example, imagine:
Before rate reduction
₦100,000 – fund earns around 18% annualized
After rates fall
₦100,000 – fund might eventually earn around 15% annualized
The exact numbers are only an illustration; a fund’s actual return isn’t simply equal to the MPR.
In fact, recent SEC-based data showed different Nigerian money-market funds reporting different yields, demonstrating that MPR ≠(not equal) the exact return of every money-market fund
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