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The cream of money market funds

rcarrick@globeandmail.com

What we're looking at

Although they pay next to nothing these days as a result of low interest rates, money market funds remain a popular parking spot for cash. Here, we zero in on money market funds with high upfront investment requirements. What's so special about these funds? Extra low fees, and higher than average returns.

Our screen

Funds needed a history of at least five years and a minimum initial investment of $5,000 to make this list, although you'll notice many with much higher thresholds. Funds have been ranked by assets.

What we found

If you must have a money market fund, these are the ones you want. Notice the high frequency of first quartile returns and the complete absence of four-quartile returns. Quartiles divide funds in a category in four groupings - first quartile is the elite, fourth is the dregs.

Another view on the performance of these funds: The vast majority have far outpaced the average one- and five-year returns for Canadian money market funds of 0.08 per cent and 1.96 per cent, respectively (those returns are to July 31).

Fee-wise, the high upfront investment requirement means a huge break over most other choices in the money market field. The average management expense ratio for the category is 0.83, which is atrocious when you go back to that one-year return of 0.08 per cent. The funds on today's list are also charging more than they're making right now, but the low fees put you on a good footing to start making more when interest rates rise.

Until rates move higher, consider money market fund alternatives such as high-interest savings accounts that can be traded like mutual funds. Examples: Renaissance High Interest Savings Account and Altamira High-Interest CashPerformer both paid 0.9 per cent on an annual basis as of mid-August.

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Money Market Funds with High Minimum Upfront Investments
As of July 2010 As of July 31, 2010
Name Assets ($ mil) Latest MER 1-yr (%) QT 1-yr 5-yr (%) QT 5-yr Min. ($)
RBC Premium Money Market6,988.410.330.2312.741100,000
TD Premium Money Market3,586.110.320.1812.611100,000
CIBC Canadian T-Bill Premium Class1,166.030.200.1712.241100,000
BMO Premium Money Market782.450.410.4812.621150,000
Scotia Premium T-Bill730.170.450.0522.112100,000
PH&N Canadian Money Market-D474.100.320.1812.5515,000
National Bank Treasury Management416.280.280.6212.7911,000,000
National Bank Corporate Cash Mgmt274.740.450.4312.611100,000
SEI Money Market-O153.210.140.5812.871150,000
Montrusco Bolton T-Max61.270.150.3612.082150,000
Beutel Goodman Money Market48.720.150.1422.34110,000
Integra Short Term Investment42.350.950.2411.86310,000
McLean Budden Money Market D40.330.550.2712.30110,000
Leith Wheeler Money Market37.070.640.0032.05225,000
Mawer Canadian Money Market23.610.410.0131.9035,000
IA Clarington Money Market-B12.580.640.0132.261100,000
ATB Money Market Series I12.090.380.2512.491250,000
Harmony Money Market Pool10.230.390.0032.10250,000
GBC Money Market9.950.870.0131.902100,000
Sceptre Money Market-A9.580.800.0332.0925,000
Standard Life Money Market-L5.020.520.1712.152250,000
Harmony Money Market Pool-W3.130.380.0132.09250,000
Standard Life Money Market-E1.260.540.1812.172100,000
SEI Money Market-I0.770.660.1022.341150,000
Scotia Premium T-BillN/A0.45 0.4212.4811,000,000
Scotia Premium T-BillN/A0.450.2612.311250,000
North Growth Cdn. Money Mkt.N/A0.250.0522.501150,000
CIBC Money MarketN/A1.140.0032.062500,000
Source: Globeinvestor.com

© 2007 The Globe and Mail. All rights reserved.

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