Here is how you can benefit from Egypt’s declining interest rates when choosing between money-market funds and fixed-income funds.
24 January 2026
Amr Hussein Elalfy
Almost 30 years ago, I had a discount brokerage account in the United States, through which I traded US stocks. One day, I received a communication message from my broker giving me the option to choose between several money-market funds that they offered. Two facts stood out to me at the time:
- The promised net asset value per fund share of these funds was USD1 at the end of every day as interest is usually distributed as more fund shares.
- The fund share may lose value because it is cash-like but not exactly cash because it is always marked to market on a daily basis.
In the United States, money-market funds usually invest in US Treasury bills, government agency securities, commercial paper, and bank certificates of deposit (CDs)—with an average maturity usually under 60 days. However, in Egypt, money-market funds are different, and so are fixed-income funds.
Here is what you need to know before investing your hard earned money in either money-market or fixed-income funds.
Fixed income for diversification
In our Egypt – 2026 Fundamental Strategy Series, we highlighted that it is important for investors to diversify their portfolios between three main asset classes:
- Equity
- Fixed income, and
- Gold.
In doing so, we recommended three strategic asset allocations (SAA) for each asset class depending on each investor’s risk profile, whether conservative, average, or aggressive. The more conservative investors are, the more weight they should have in the fixed income asset class. For the recommended weights for each risk profile, please read our Egypt – 2026 Fundamental Strategy Series.
In Egypt, fixed income instruments can range from banks’ CDs and time deposits to Treasuries, which investors can buy from banks. The only trick here is that it is not as easy to exit without losing some interest. This is where money-market and fixed-income funds come into play.
But let’s first define what money-market and fixed-income funds are.
What are money-market and fixed-income funds?
Money-Market Funds
These are designed to help investors park their cash while earning a return. They invest in short-term instruments, such as Treasury bills and bank deposits, with maturities of less than one year. These funds offer high liquidity and relatively stable performance, making them suitable for short-term savings and cash management rather than long-term investing.
Fixed-Income Funds
These invest in longer-term debt instruments, including government bonds, floating-rate notes, corporate bonds, and sukuks. Because these instruments are sensitive to changes in interest rates, the value of fixed-income funds can rise or fall over time. These funds are suitable for investors seeking higher returns (vs. money-market funds) and willing to accept price fluctuations over a medium- to long-term horizon.
Choosing between money-market and fixed-income funds?
For investors to choose between money-market and fixed-income funds, it is best to compare them given their different attributes, which we summarize in the below table from an investor’s and a fund’s view:
| Attribute | Money-Market Fund | Fixed-Income Fund |
| An investor’s view | ||
| Investing purpose | Liquidity parking | Yield / macro positioning |
| Typical holding period | Days to months | 1 to 5+ years |
| Return | More stable, more predictable | Less stable, less predictable |
| NAV volatility | Very low | Low to moderate, can be material |
| Income main source | T-bill yield | Coupons + capital gains |
| A fund’s view | ||
| Duration (interest rate sensitivity) | Lower | Higher |
| Interest rate decisions by CBE | A more quickly impact | A delayed impact |
| Reaction to rate hikes | Less negative | More negative |
| Reaction to rate cuts | Less positive | More positive |
| Fund holdings & maturity |
|
|
| Revaluation frequency (more on fund revaluation below) | Daily (marked to market) |
|
Source: Rumble Research
What does “fund revaluation” mean?
In calculating the fund’s net asset value (NAV), fixed-income funds tend to reevaluate their holdings depending on the accounting treatment applied to the securities they hold.
For instance:
- Instruments classified as held to maturity (HTM) are carried at amortized cost and are therefore not impacted by daily market price movements
- Securities measured at fair value or marked to market (MTM) are revalued periodically and reflect changes in interest rates and market conditions.
For valuation purposes, liquid securities are typically priced using the average traded price of the day, while illiquid instruments are valued using the last available transaction price—all quoted on the Egyptian Exchange.
Although certain provisions, such as accrued expenses or tax-related items, are purely accounting entries and do not negatively affect NAV, they often have a slightly positive impact through income accrual.
Reevaluation, on the other hand, is triggered either by regulatory requirements, as IFRS mandates periodic fair-value assessment, or by practical considerations, such as increased redemption activity that necessitates greater liquidity and may force a reclassification from HTM to MTM.
Mark-to-market valuation is particularly favorable in a declining interest rate environment, as bond prices rise, and it also gives fund managers greater flexibility to actively trade and realize capital gains.
The bottom line
In a nutshell:
- Money-market funds are cash-management tools with minimal duration risk (interest rate risk), while
- Fixed-income funds are rate-sensitive investment vehicles whose returns depend heavily on the interest-rate cycle and bond price movements.
If you are an investor with a short-term investment horizon and looking to park some cash on the sideline, then money-market funds are for you.
On the other hand, if you are an investor with a long-term investment horizon and looking to generate higher returns over time, then fixed-income funds are for you but you need to keep in mind that fixed-income funds are more volatile when it comes to the impact of revaluation which is usually positive when interest rates decline and negative when interest rates increase.
In view of the current easing cycle by the Central Bank of Egypt (CBE), long-dated debt securities should benefit the most. Thus, fixed-income funds will be more positively impacted by lower interest rates as opposed to money-market funds.
On Thndr, there are currently a total of 10 fixed-income funds that can be split between money-market funds and fixed-income funds, which you can choose from to match your profile:
| Money-Market Funds (Asset Manager) | Fixed-Income Funds (Asset Manager) |
| 1. ADM – Diamond Fund (AAIM) | 1. ABR – Bareeq (AAIM) |
| 2. ATD – Al Ahly Tamayoz Dividends (AFIM) | 2. BSC – B Secure (Beltone) |
| 3. AZN – AZ Nasser Fund (Azimut) * | 3. AIS – Istithmar wi Aman (AAIM) |
| 4. AZS – AZ Savings Fund (Azimut) | |
| 5. MTF – Misr Takaful Fund (AAIM) * | |
| 6. PCM – PFI Cashi Fund (PFI) | |
| 7. PGM – GIG Money Market (PFI) |
* Sharia compliant
Source: Thndr
