In an environment marked by geopolitical tensions, inflation uncertainty and persistent market volatility, the role of money market funds (MMFs) as a source of stability and liquidity has come under renewed focus. For investors seeking capital preservation, consistent liquidity and dependable returns, Fidelity’s disciplined approach offers a proven framework designed to withstand periods of market stress.

Key points

• Our money market funds are built on disciplined liquidity management and high credit quality, enabling them to preserve capital and maintain stability even during periods of market stress.
• Each fund maintains substantial short-term liquidity providing investors with immediate access to cash while sustaining yield discipline and diversification.
• A conservative portfolio design combined with active risk oversight helps to provide resilience, making our MMFs a dependable core liquidity solution for investors across market cycles.

Stability and active risk management

Money market funds are widely recognized for their low-risk profile. EU-regulated low volatility net asset value funds, for instance, are required to keep their share prices within 0.2% of par value at all times—many funds consistently remain within just 0.01% of par for years. However, beyond their inherent stability, money market funds offer a second, often underestimated strength: the ability to swiftly reduce risk during periods of market stress.

At Fidelity, our money market funds combine a conservative investment philosophy with active management. This enables us to respond quickly in times of crisis and reduce portfolio risk effectively. To achieve this, our approach is built on two core pillars: liquidity and capital preservation.

Liquidity built for flexibility

Liquidity is central to the structure of Fidelity’s money market funds. Each fund typically maintains around 40% of its assets in instruments that mature or can be converted into cash within one week. This liquidity is diversified across overnight deposits, reverse repurchase agreements, very short-dated securities and callable instruments.

During periods of stress, this liquidity structure allows the portfolio managers to respond immediately. The first line of defence is to allow maturing positions to roll off naturally, reinvesting the proceeds in overnight instruments. As longer-dated securities mature at an average rate of around 4% per week, the natural liquidity profile increases rapidly. If further liquidity is required, callable securities can be exercised, followed by selective sales of longer-dated but still high-quality holdings.

This structured and proactive approach has been tested in real market conditions. During the US regional banking volatility in early 2023, for example, the Fidelity ILF US dollar fund increased its liquidity from 56% in mid-February to 70% by mid-March by allowing maturities to roll off. The same disciplined process was implemented during the Liberation Day tariff-related market stress earlier this year, which enabled the funds to maintain a high level of liquidity throughout.

Quality as the cornerstone

Capital preservation is driven by credit quality and diversification. Fidelity’s MMFs differentiate issuers by both credit rating and maturity profile to ensure longer-dated holdings are limited to only the highest-quality issuers. This structure mitigates the impact of spread widening during volatility. Since market value fluctuations are primarily a function of duration and spread movement, maintaining longer duration holdings reduces the potential for mark-to-market volatility.

Importantly, securities with lower credit ratings are deliberately limited to shorter maturities in our portfolios. As a result, they mature first during stress events, which naturally improves the average credit quality of the fund and reduces overall risk.

Conservative by design, responsive by nature

Fidelity’s MMFs are built around a conservative foundation yet are structured to adjust quickly to changing market conditions. Conservative positioning provides stability, while dynamic liquidity management enables them to adapt rapidly when conditions shift. As securities mature and riskier holdings roll off first, the funds become increasingly defensive when markets are under pressure.

This balance of prudence and flexibility is fundamental to their resilience. It ensures that the funds can maintain investor access and confidence while continuing to meet short-term liquidity requirements, even in stressed environments.

A proven liquidity solution

The re-emergence of volatility and elevated policy uncertainty have re-established MMFs as a core liquidity instrument. In a world where capital flexibility, regulatory discipline and transparency are critical, these funds offer investors a practical solution to preserve capital, manage liquidity and earn a competitive return relative to short-term deposits.

Available in euro, US dollar and sterling share classes, Fidelity’s MMFs combine scale, depth and consistency across currencies. They are designed to provide immediate access to capital, preserve value through disciplined risk management and deliver steady income through changing market cycles.

Investment objective and policy

The fund aims to achieve capital growth over time and provide income.

The fund invests in a diversified range of short-term instruments, including high quality money market instruments (including government securities, bank obligations, commercial paper and other short-term obligations), high quality securitisations and asset-backed commercial paper, deposits, repurchase agreements and reverse repurchase agreements, and units or shares in eligible money market funds.  The fund aims to achieve an ESG score of its portfolio greater than that of its investment universe. In addition, through the investment management process, the Investment Manager aims to ensure that investee companies follow good governance practices.

Please refer to the Prospectus and KID of the fund before making any final investment decisions. The investment which is promoted concerns the acquisition of units or shares in a fund and not in a given underlying asset owned by the fund

Important information

• This material is for Institutional Investors and Investment Professionals only, and should not be distributed to the general public or be relied upon by private investors.
• Investors should note that the views expressed may no longer be current and may have already been acted upon.
• The value of investments and the income from them can go down as well as up so you may get back less than you invest. Past performance does not predict future returns. 
• An investment in a money market fund is different from an investment in deposits, as the principal invested in a money market fund is capable of fluctuation. Returns may increase or decrease as a result of currency fluctuations. 
• Fidelity’s money market funds do not rely on external support for guaranteeing the liquidity of the money market funds or stabilising the NAV per unit or share. An investment in a money market fund is not guaranteed.
• The investment policy of these funds means they can be more than 35% invested in transferable securities and money market instruments issued or guaranteed by an EEA State, one or more of its local authorities, a third country or a public international body to which one or more EEA States belongs.
• These funds invest in bonds whose price is influenced by movements in interest rates, changes in the credit rating of bond issuers, and other factors such as inflation and market dynamics. In general, as interest rates rise the price of a bond will fall. The risk of default is based on the issuer’s ability to make interest payments and to repay the loan at maturity. Default risk may, therefore, vary between different government issuers as well as between different corporate issuers. Due to the greater possibility of default an investment in a corporate bond is generally less secure than an investment in government bonds.
• Funds are subject to charges and expenses. Charges and expenses reduce the potential growth of your investment. This means you could get back less than you paid in. The costs may increase or decrease as a result of currency and exchange rate fluctuations. Please note that not all costs are presented, further information on costs can be found in the Prospectus.
• Please refer to the Prospectus and KID of the fund before making any final investment decisions. The investment which is promoted concerns the acquisition of units or shares in a fund and not in a given underlying asset owned by the fund.

This information must not be reproduced or circulated without prior permission. This information does not constitute investment advice unless specifically agreed in a formal communication. Fidelity International refers to the group of companies which form the global investment management organisation that provides information on products and services in designated jurisdictions outside of North America. Fidelity, Fidelity International, the Fidelity International logo and F symbol are registered trademarks of FIL Limited. FIL Limited assets and resources as at 00/01/1900 - data is unaudited.

This communication is not directed at, and must not be acted upon by persons inside the United States and is otherwise only directed at persons residing in jurisdictions where the relevant funds are authorised for distribution or where no such authorisation is required.  We recommend that you obtain detailed information before taking any investment decision. Investments should be made on the basis of the current prospectus and the KID (key information document) or KIID (key investor information document), as applicable. These documents, the current annual and semi-annual reports as well as information on investor rights are available in the languages and on the websites indicated below.

Germany: Prospectus in English, KID and Complaints policy in German on www.fidelity.de/anlegerinformationen, www.fidelity.de/beschwerdemanagement/ and www.fidelity.lu/complaints-handling-policy. Any performance disclosure is not compliant with German regulations regarding retail clients and must therefore not be handed out to these. Issued for German Wholesale clients by FIL Investments Services GmbH / for German Pension clients by FIL Finance Services GmbH (Kastanienhöhe 1, 61476 Kronberg im Taunus). Issued for German Institutional clients by FIL (Luxembourg) S.A., 2a, rue Albert Borschette BP 2174 L-1021 Luxembourg.

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