A few months ago, the story felt straightforward – rates were expected to fall, T-bill yields were sliding, and investors were wondering whether it was time to move cash elsewhere.
Then the Middle East conflict escalated. Oil prices jumped, inflation expectations shifted, and the outlook for interest rates becomes less clear again.
The rate outlook just got complicated
Expectations now are only for one Fed rate cut by December this year, (as of April 2026)1.
The latest March 2026 Fed meeting minutes2 also showed that market expectations for rates have shifted higher, as rising energy prices are feeding into near term inflation concerns.
In other words, higher for longer is likely back on the table.
For investors who had already started moving on from cash, that could change the picture again.
Why Money Market Funds make sense right now?
When rates stay elevated and the outlook remains uncertain, money market funds may still have a role to play rather than being seen as just a temporary parking vehicle for cash.
For illustration purposes only.
Source: Fullerton Fund Management Company Ltd
In SGD terms, as of end-March 2026, the Fullerton SGD Cash Fund (Class A) delivered a 1-year return of 1.82% (bid-to-bid returns), ahead of its benchmark, the Singapore Dollar Banks Savings Deposits Rate, which returned 0.42% over the same period. As of 31 March 2026, the fund’s 5-day rolling average gross yield was 1.4%. Additionally, the Fund has no minimum investment, charges a management fee of 0.16% per annum, and accepts daily dealings up to 5pm Singapore time.
Fullerton SGD Cash Fund – Class A
Returns of more than 1 year are annualised. Returns are calculated on a Bid-Bid basis in SGD with net dividends and distributions (if any) reinvested. Offer-to-bid returns include an assumed preliminary charge of 0.5% which may or may not be charged to investors. Fund holidays are to be based on the Singapore calendar. Benchmark: Singapore Dollar Banks Saving Deposits Rate. Inception date: 3 Feb 2009.
Source: Fullerton Fund Management Company Ltd and MAS. Data as of 31 March 2026
For those with US dollar cash holdings, the Fullerton USD Cash Fund offers a similar structure, but with potentially higher yield given the different environment in USD rates as compared to SGD rates. As of 31 March 2026, its 5-day rolling average gross yield was 3.9%, while its 1-year return (Class A USD) stood at 4.16% in USD terms (bid-to-bid returns).
Like the SGD fund, it has no minimum investment, charges a management fee of 0.16% per annum, and accepts daily electronic dealings up to 10am Singapore time.
Fullerton USD Cash Fund – Class A (USD)
Returns of more than 1 year are annualised. Returns are calculated on a Bid-Bid basis in USD with net dividends and distributions (if any) reinvested. Offer-to-bid returns include an assumed preliminary charge of 0.5% which may or may not be charged to investors. Inception date: 13 May 2020.
Source: Fullerton Fund Management Company Ltd and Bloomberg. Data as of 31 March 2026.
If the Fed is not in a hurry to cut rates, money market funds may still offer an attractive avenue to earn yield while keeping duration risk low.
The active management edge
In a volatile, news-driven rate environment, active management matters more than when rates are moving steadily in one direction.
Fund managers can adjust portfolio positioning by monitoring macro trends, tracking rate expectations, and fine-tuning weighted average maturity to balance returns and liquidity considerations. That means positioning can adapt as conditions change, without investors needing to make those adjustments themselves.
What to watch for?
Money market funds are generally lower risk, but they are not risk-free. Capital is not guaranteed, yields are likely to fall if interest rates are cut, and investors in the USD fund should also be mindful of currency risk if their spending or liabilities are mainly in Singapore dollars.
A practical option while waiting for clarity
In a volatile, news-driven environment, active management matters, as fund managers can adjust portfolio positioning as needed, when conditions evolve.
Nobody knows exactly when, or even whether, rates will fall meaningfully from here.
But for investors looking to earn a reasonable return on idle cash without taking on unnecessary risk, a well-managed money market fund with a very established team may still be one of the more viable places to stay invested for now.
1Fullerton Fund Management view, which is subject to change without prior notice.
2https://www.federalreserve.gov/monetarypolicy/fomcminutes20260318.htm
Important Information:
This publication is for information only and your specific investment objectives, financial situation and needs are not considered here. The value of units in the Fund and any accruing income from the units may fall or rise. Any past performance, prediction or forecast is not indicative of future or likely performance. Any past payout yields and payments are not indicative of future payout yields and payments. Distributions (if any) may be declared at the absolute discretion of Fullerton Fund Management Company Ltd (UEN: 200312672W) (“Fullerton”) and are not guaranteed. Distribution may be declared out of income and/or capital of the Fund, in accordance with the prospectus. Where distributions (if any) are declared in accordance with the prospectus, this may result in an immediate reduction of the net asset value per unit in the Fund. Applications must be made on the application form accompanying the prospectus, which can be obtained from Fullerton or its approved distributors. You should read the prospectus and seek advice from a financial adviser before investing. If you choose not to seek advice, you should consider whether the Fund is suitable for you. The Fund may use or invest in financial derivative instruments. Please refer to the prospectus of the Fund for more information.
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