Treasury Bills Offer Higher Returns Than Money Market Funds in Nigeria
Treasury bills offer higher returns than money market funds in Nigeria before tax.
In Brief
- •Treasury bills offer higher returns than money market funds in Nigeria before tax.
- •The Central Bank of Nigeria's auction on October 14, 2026, set stop rates at 15.50% for 91-day bills, 15.80% for 182-day bills, and 15.90% for 364-day bills.
- •Money market funds have an average yield of 17.33% as of October 2, 2026, with a range from 10.5% to 21.29%.
- •Treasury bills' true yield before tax is about 18.9% for a 364-day bill, compared to the fund's 17.33%.
- •After a 10% withholding tax, the fund edges out the bill by about ₦3,113 for a ₦841,436 investment held for a year.
Why It Matters
Understanding the differences between Treasury bills and money market funds is crucial for Nigerian investors seeking optimal returns on their cash holdings. Treasury bills offer higher yields before tax, but money market funds may provide a slightly better return after accounting for taxes. This comparison helps investors make informed decisions based on their financial goals and tax considerations.
Key Details
- Treasury Bill Stop Rate (364-day)
- 15.90%
- Treasury Bill True Yield (Before Tax)
- 18.9%
- Money Market Fund Average Yield
- 17.33%
- Investment Amount
- ₦841,436
- Treasury Bill Gain (Before Tax)
- ₦158,564
- Money Market Fund Gain
- ₦145,821
- Treasury Bill Gain (After Tax)
- ₦142,708
Context & Background
Treasury bills and money market funds are both short-term investment options in Nigeria, offering different rates of return and maturity periods. The Central Bank of Nigeria conducts auctions to determine the stop rates for Treasury bills, while money market funds are managed by fund managers who invest in a pool of money.
Original Reporting & Sources
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