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Part of the guideHow to save in Nigeria when inflation is high
The short answer
A money-market fund pools savers' money into Treasury bills, commercial paper and bank placements, is registered with the Securities and Exchange Commission and keeps its assets with an independent custodian. Most let you withdraw within one to three working days. Returns follow short-term rates and are not guaranteed: the top ten funds showed year-to-date yields of 19% to 21.4% in late September 2026, before the full effect of the September rate cut.
Money-market funds (MMFs) are the largest kind of mutual fund in Nigeria. On 25 September 2026 the 49 funds in the category held ₦6.56 trillion, about 68% of all mutual-fund assets, according to SEC data compiled by Nairametrics. They sit between a savings account and a Treasury bill in our guide to saving in Nigeria when inflation is high: more return than a typical bank account, more access than a locked deposit.
What the fund actually holds
When you put money into an MMF you buy units in a pool. A fund manager invests the pool in short-term, high-quality instruments:
- Federal Government Treasury bills, usually the largest share.
- Fixed placements with banks.
- Commercial paper issued by large companies.
- Cash held for withdrawals.
The manager is licensed by the SEC, and the assets are held by a separate custodian, usually a bank's custody arm. The custodian holds the securities in the fund's name, not the manager's, so they are kept apart from the manager's own money. A trustee oversees the fund on unit-holders' behalf.
How the yield is calculated and why it moves
Most Nigerian MMFs price units at a fixed ₦1, ₦100 or ₦1,000 and pay income by adding units or crediting interest daily. Published yields are usually the annualised return of recent days or year to date, after the fund's management fee. The yield is not a promise; it is what the fund earned on what it held.
Because the fund's holdings mature and are replaced every few weeks, yields follow the Treasury bill and interbank market with a lag. On 22 September 2026 the CBN cut its policy rate from 26.5% to 23%. At the next auction, Treasury bill stop rates fell by 70 to 80 basis points; the 364-day rate went from 16.62% to 15.89%. Fund yields will drift down as older, higher-paying holdings roll off.
| Fund (top 10 by YTD yield, NAV at 25 Sept 2026) | Year-to-date yield |
|---|---|
| First Ally Money Market Fund | 21.43% |
| Coronation Money Market Fund | 21.11% |
| DLM Money Market Fund | 20.54% |
| RT Briscoe Savings & Investment Fund | 20.53% |
| STL Money Market Fund | 19.39% |
| CardinalStone Money Market Fund | 19.31% |
| Myrtle Nest Money Market Fund (10th) | 19.01% |
The table shows selected funds from the top ten. These are the leaders; the average fund earns less, and the list changes month to month. Past yield is not a forecast.
A worked example
Say you put ₦500,000 into a fund yielding 18% a year and leave it for three months. Simple income would be about ₦500,000 × 18% × 91 ÷ 365 = ₦22,438. If the fund's yield falls to 16% halfway through, your three-month income is nearer ₦21,192. That is the trade: no lock-in, but no fixed rate either.
Now set the same ₦500,000 against a 91-day Treasury bill bought at the 7 October 2026 auction at a 15.50% discount rate. The bill's effective yield is about 16.1% a year before tax, and that rate is fixed until maturity. If fund yields slide below 16% over the quarter, the bill wins; if you need the money in week six, the fund wins, because selling a bill early depends on the market price that day. Many savers hold both: a fund for flexibility and bills for dates they already know.
Compare that with leaving the same ₦500,000 in a bank savings account at the CBN minimum of 6.9% (30% of a 23% policy rate). Over the same three months you would earn about ₦8,602, before tax. Headline inflation was 14.63% in September 2026, so the savings account loses buying power while a fund at 16–18% roughly keeps pace.
What about tax?
Withholding tax of 10% applies to interest on Treasury bills, commercial paper and bank deposits, including when an individual is the investor. In a fund, the tax is usually suffered on the underlying income before it reaches you, and published yields are normally net of it. Ask your fund how it reports tax. Our article on withholding tax on interest covers the rules.
Risks and protection
MMFs are low-risk, not risk-free. Four points matter:
- No NDIC cover. Deposit insurance covers bank deposits, not fund units. Your protection is SEC regulation, the custodian and the quality of what the fund holds.
- Credit risk. A fund that reaches for yield through riskier commercial paper or small banks can earn more and lose more. Read the fund's latest factsheet for its asset mix.
- Liquidity. Most funds pay within one to three working days, but the trust deed may allow longer in stressed markets. Do not keep money you need the same day here.
- Rate risk. Yields fall when rates fall. A fund is a poor choice if you need a guaranteed amount on a fixed date; a Treasury bill or fixed deposit suits that better.
How to choose a fund
- Check that the fund appears in the SEC's weekly net asset value list for collective investment schemes.
- Read the factsheet: asset mix, average maturity, management fee and custodian.
- Compare yields over several months, not just the latest week.
- Note the minimum investment and any minimum holding period or early-exit charge.
- Find out how long redemptions take, and whether you can redeem through an app or only by instruction.
- Prefer managers with a long record and a large, diversified fund over the highest yield this month.
A fund works well for the second layer of an emergency fund (money you might need within a week, not within an hour) and for goals a few months away. See our article on sizing an emergency fund for the layering, and our guide to buying Treasury bills if you would rather hold the bills yourself.
One habit makes a fund easier to use: decide in advance what it is for. A fund held as the second layer of an emergency fund should not also be the place you dip into for a holiday. If you use the same fund for several goals, keep a simple note of how much belongs to each, or open separate accounts with the manager where that is allowed.
Where Pryme fits
For a money-market fund, use an SEC-registered fund manager that offers one; the checks above explain what to look for. In Nigeria, Pryme's Investment Box (Nigeria-only, in naira) is meant for money you can leave for longer. It is not a money-market fund and works differently from a deposit or a fund. The money in it is used to fund lending by Solid Allianze Microfinance Bank Ltd, including Spaces credit, and that lending is where its return comes from. So the return depends on how the lending book performs, and the money is held until the maturity date you agree to; it is not available before then. The rate and terms are shown in the app before you commit, and any target return is not a guarantee. For money you may need sooner, the Flexible Box sits at the other end of the range; its rate is shown in the app and can change.
Whichever you use, compare it with a fund on the same basis: after tax, after fees and against inflation. The main savings guide sets out that comparison across every option.
Questions people ask
Which money market fund pays the highest interest in Nigeria?
Rankings change monthly. In the September 2026 table, First Ally, Coronation and DLM led with year-to-date yields between 20.5% and 21.4%. A high yield this month does not guarantee the next, so check several months and the fund's asset mix.
Can I lose money in a money market fund?
It is unlikely but possible. Funds hold short-term government and bank instruments, but a default by a commercial paper issuer could reduce returns. Fund units are not covered by NDIC deposit insurance.
How quickly can I withdraw from a money market fund?
Most Nigerian funds pay out within one to three working days. Check the fund's terms for any minimum holding period or exit charge.
Are money market funds better than fixed deposits?
They offer more access and returns that track the market, while a fixed deposit locks a rate until a set date. If rates are falling, a fixed deposit or Treasury bill can protect your rate; a fund suits money you may need at short notice.
Is the money market fund yield after tax?
Usually yes, because tax is withheld on the fund's interest income before it is credited. Ask the manager to confirm how it reports tax for your fund.
Sources
- Nairametrics: best-performing money market funds as of September 2026 · accessed Oct 2026
- SEC Nigeria: weekly net asset values of collective investment schemes, 2026 · accessed Oct 2026
- Arise News: CBN cuts MPR to 23% from 26.5% (MPC, 22 September 2026) · accessed Oct 2026
- Nairametrics: NTB stop rates fall after the September 2026 rate cut · accessed Oct 2026
- NBS CPI, September 2026: inflation slows to 14.63% (Nairametrics) · accessed Oct 2026
- CBN circular on savings deposit rate at 30% of MPR (via Blueprint) · accessed Oct 2026
- Templars Transcripts (Tax), October 2025: FIRS public notice on WHT on short-term securities · accessed Oct 2026
- BusinessDay: why withholding tax was deducted from savings interest · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.