A Qualifying Money Market Fund (QMMF) is a type of investment, and is one of the safest places you can put your money to work. It can be considered a ‘cash equivalent’ given its very low risk high degree of safety, and how quickly funds in a QMMF can be accessed.
When a financial company collects money from customers, it has to hold it either with:
A Central Bank
Α Credit Institution
A Bank authorised in a third country
Α Qualifying Money Market Fund (QMMF).
That’s how safe the FCA deems QMMFs to be, since they are one of just four places that the FCA identifies as being safe enough to hold Client Money and permitted by HMRC to be used to hold Cash ISA money. The low risk of a QMMF is driven by a few factors. The investments of a QMMF include mainly short-term government-issued or -guaranteed securities and short, fixed-term deposits from high-quality companies. In addition, MMFs need to have certain characteristics to be considered "Qualifying":
The MMF’s primary objective must be to preserve capital
The MMF has to follow strict rules around only making investments in high quality instruments to keep risk low
It must offer investors the ability to withdraw their money very quickly (i.e. same or next day)
Given these characteristics of a QMMF, pension providers, insurance funds and other financial institutions, hold large amounts of customer deposits in QMMFs.
Plum is not a bank. Your Cash ISA funds will either be held with our banking partner Citibank plc or in one of Blackrock’s Qualified Money Market Funds (QMMF) that we use.