Money market fund - NTUC Income

Hi Mr Tan,

Recently, I put a sum of money in NTUC money market fund. The bid/offer rate was 1.066, but it drop to 1.065 the following day.

Assuming I had invested 100,000 units, I would have lost $100. Is my assumption correct ?

Why does the price go down? The MMF is not a safe investment. Perhaps I should park my saving in FD or Govt Bond, correct?

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REPLY:

You should look at the price over several days and not on a specific day. The drop in price is probably due to a unusual situation (eg usually due to change in money market interest rate) and is corrected the following day.

If you wish to take out your money, you can ask NTUC Income to wait until the price reaches a certain level, so that you are not subject to this temporary fluctuation.

For example, I wanted to withdraw some money when the price was at 1.066. It had been at this level for many days. I gave instruction to make the withdrawal when it reached 1.067. It occured within a few days.