When stocks fall and interest rates erode: Where can you earn more than in money market funds?

The article examines where higher returns can be achieved than in money market funds, given the decline in interest rates and the relatively low yields of managed bond funds over the past year. Alternatives such as government bonds, bond funds with a maturity year, index-tracking funds on Tel Bond indices, and bank deposits are presented.

The article examines where higher returns can be achieved than in money market funds, given the decline in interest rates and the relatively low yields of managed bond funds over the past year. Over the past year, 33 shekel-denominated money market funds generated a median return of about 3.8%, but now, after the Bank of Israel cut the interest rate from 4.5% to 3.25%, the annual return on money market funds is estimated at only about 3.3%. In comparison, 95 managed government and corporate bond funds yielded a median return of only 2.66%, and 98 managed corporate bond funds managed only about 2.8%. The article offers several alternatives: shekel-denominated government bonds with a suitable maturity (two-year bonds offer about 3.4%, five-year bonds about 3.9%), bond funds with a defined maturity year (2028 or 2029) that yielded a median return of 4.65%-4.67%, index-tracking funds on Tel Bond indices (yield to maturity of about 5% gross), and a bank deposit at a fixed interest rate (Bank Jerusalem offers 3.25% for one year, One Zero offers 6% up to NIS 100,000). The article emphasizes that recent declines have improved the yield to maturity in some bond tracks, but warns of credit risks and market changes.