Is my money safe with DEGIRO?
Your money will be received at DEGIRO by a separate foundation. If you don’t directly invest this money it will be automatically invested in one of the qualified money market funds of Fundshare Fund Management. This is done via the standing order given by you during the registration process
Money market funds
DEGIRO believes it is important that clients understand how the structure with the money market funds works. DEGIRO is not a bank but an investment firm. In the Netherlands investment firms are not allowed to hold money of clients. Therefore, when you become a client of DEGIRO, you give a standing order to invest money in money market funds (the FundShare Cash Funds). The money market funds DEGIRO has available are all qualified money market funds. For every currency available in the WebTrader, a separate money market fund is also available. The management costs of these funds are included in the fund's return. Due to the current low interest rates of some currencies, the return of the relevant money market fund is negative. A negative return, as a result of the low interest rates and management costs, will be compensated by DEGIRO until further notice.
One of the objectives of qualified money market funds is to realise a return that is equal to the market interest rate with as low risk as possible. An additional advantage to the low risk, is that your qualified money market fund participations, just like your other investments, are kept strictly separate from the assets of DEGIRO.
Money market funds are often used by institutional investors, such as pension funds, to hold large amounts of money in a safe way. Approximately €1 trillion are currently being held in money market funds in Europe. (Source)
"The objective of the money market funds is to realise a return that is equal to the market interest rate with as low a risk as possible."
Fund provider
The FundShare Cash Funds are managed by FundShare Fund Management, a sister company of DEGIRO. FundShare manages qualified money market funds in EUR, USD, GBP, CHF, SEK, NOK, HUF, and DKK. All these funds are qualified money market funds, which means that the funds have to comply with strict requirements.
Risk
The FundShare money market fund's main objective is to minimize risk. With the strict investment policy, this risk is very low. According to the Key Investor Information Document of the fund, this risk level is a 1 on a scale of 1 to 7.
For more information on the risks and the risk indicator as determined by the fund manager, we refer you to the information documents prepared by the fund manager: the prospectus and the Key Investor Information Document (KIID).
Downloads:
Costs and return of the FundShare money market fund
At the moment, the market interest rate for short-term EUR bonds with a low risk are negative. As a result, the EUR Cash Fund currently achieves a negative result.
Annually an amount of 0.09% of the fund's assets are charged as management costs for the qualifying money market funds. These costs are included in the fund return.
Although any positive return on your investment is yours, a negative return as a result of the current interest and fund costs is currently compensated by DEGIRO on a non-committal basis. Click here for more information. The qualified money market funds available at DEGIRO have no entry and exit costs.
Below is a general overview of the situation per money market fund as of the end of September 2018;
| Qualifying money market fund | Current Interest | Compensation |
| EUR | Negative | Yes |
| USD | Positive | N/a |
| GBP | Positive | N/a |
| Money market fund | ||
| CHF | Negative | Yes |
| SEK | Negative | Yes |
| NOK | Positive | N/a |
| HUF | Negative | Yes |
| DKK | Negative | Yes |
Please note: the compensation given by DEGIRO is on a non-committal basis. DEGIRO is not obliged to do so and can change or end the compensation on any moment. Of course we will always communicate such changes to you. The compensation only applies to negative returns as a result of negative interest and management costs. Loss suffered on an investment made by the fund will not be compensated by DEGIRO. This risk is low.
Questions
With money market funds, including also the FundShare money market funds, you run credit risks just as with a bank. The portfolio is after all invested in bonds (loans). However, the Cash Funds, and especially those that qualify as qualifying money market funds, adhere to very strict investment policies. Investment are only allowed to be made in bonds with very high credit ratings and short duration. The credit risk is therefore very limited. The deposit guarantee scheme does not apply to money market funds. However, their low risk applies for assets of both above and below 100,000 euros. That is why money market funds are often used by institutional parties to hold large amounts of money in a safe way. In total, approximately 1 trillion euros are currently being placed in money market funds in Europe.(Source). Moreover, your investment in Cash Funds is just as safely separated from DEGIRO as all your other investments at DEGIRO.
For many clients the market interest of their local currency will be negative. We want to prevent our clients from being affected by this negative interest. That is why we have decided to compensate on a non-committal basis the negative return in the money market funds as a result of the interest and management costs.
IIt is possible that the value of the money market funds falls as a result of losses suffered on an investment made by the fund. This can occur if, for example, the Dutch or German state can unexpectedly no longer meet its payment obligations. In such a case, DEGIRO will not offer any compensation on the losses incurred. This risk is however very low.
The compensation is entirely non-committal and does not create any rights and does not oblige DEGIRO to follow the same approach in the future. DEGIRO pays this compensation on the basis of commercial considerations. DEGIRO reserves the right to waive this compensation. DEGIRO will inform you thereof in time. The compensation will be paid to you directly once per quarter.
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