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A money market fund is the most conservative option in the investment world: it invests in very short-term government debt, treasury bills, and bank deposits. The goal is not rapid growth — it is not to lose money while earning something more than a current account.
In recent years, with ECB interest rates at high levels, money market funds have become relevant again. In 2024-2026, they have offered annual returns of 2-4% with minimal risk. This guide explains how they work, what options you have from the Netherlands, and how they are taxed under the Dutch fiscal system.
Money Market Fund vs. Other Alternatives: Quick Comparison
| Option | Indicative Return 2026 | Risk | Liquidity | State Guarantee |
|---|---|---|---|---|
| NL Bank Current Account | 0 – 0.5% | Very low | Immediate | Yes (up to €100k) |
| Money Market Fund (ETF) | 2 – 3.5% | Very low | 1-2 business days | No |
| Fixed-term Deposit (Raisin) | 2.5 – 3.8% | Very low | At maturity | Yes (up to €100k) |
| Interest-bearing Account (Trade Republic) | ~2.75% | Very low | Immediate | Yes (up to €100k) |
| Equity ETF | Variable (historically 7-10%) | High | 1-2 business days | No |
How a Money Market Fund Works
A money market fund pools money from many investors and places it in:
- Treasury Bills — short-term government debt issued by States (Germany, France, etc.)
- Repos — very short-term repurchase agreements between financial institutions
- Bank Certificates of Deposit — debt issued by banks with a maturity of less than one year
The returns of these funds closely follow the European Central Bank (ECB) interest rate. When the ECB raises rates, money market funds offer more. When it lowers them, their returns fall. In 2022-2024, rates rose to 4% — euro money market funds yielded 3.5-4% annually. In 2025-2026, with the ECB lowering rates towards 2-2.5%, returns have moderated but remain attractive compared to typical Dutch bank accounts.
Options Available from the Netherlands in 2026
1. Euro Money Market Fund ETFs (via DeGiro or Trading 212)
The most direct way to invest in money market funds from the Netherlands is through ETFs that track euro money market indices. The most commonly used are:
- Xtrackers II EUR Overnight Rate Swap UCITS ETF (XEON) — ISIN LU0290358497. Tracks the €STR rate (successor to EONIA). It is the benchmark for euro investors seeking returns linked to the ECB rate without duration risk.
- iShares € Govt Bond 0-1yr UCITS ETF (CSH2) — ISIN IE00B3FH7618. Invests in eurozone government debt with a maturity of 0 to 1 year. Slightly higher risk than XEON, but more diversified.
- Amundi Euro Liquidity UCITS ETF (AFMO) — an alternative from asset manager Amundi with a similar profile.
These ETFs are listed on stock exchanges and you can buy them from any Dutch broker (DeGiro, Trading 212). The fund’s annual fee is typically 0.10-0.15%. Liquidity is high: you can sell on any business day.
2. Fixed-term Deposits via Raisin — up to 3.8% guaranteed
If you don’t need the money for 3, 6, or 12 months, fixed-term deposits can offer slightly higher returns than money market funds and have the advantage of being guaranteed by the deposit guarantee scheme of the issuing bank’s country (up to €100,000).
Raisin is a European platform that aggregates deposits from dozens of European banks. From a single account, you can compare and open the deposit with the highest interest rate available at the moment, without having to open an account with each bank. It is the most used option by residents in the Netherlands seeking risk-free returns.
→ See the best deposits available on Raisin now
3. Trade Republic Interest-bearing Account — no fixed term
If you want immediate returns without committing your money to a fixed term, Trade Republic offers an interest-bearing account that pays interest on your available balance. It is the most liquid option: you can move your money at any time, and interest accrues daily.
→ Open an account with Trade Republic and get a welcome bonus
4. Mintos Smartcash — alternative with higher returns
Mintos offers a product called Smartcash that functions similarly to a money market fund: it invests in very short-term loans and allows you to withdraw money at any time. Returns are typically somewhat higher than conventional money market funds, but it carries greater risk — it is not covered by any deposit guarantee scheme. Suitable as a complement, not as a substitute for a traditional money market fund.
Taxation in the Netherlands: Box 3
In the Netherlands, all savings and investment assets (including money market funds, ETFs, and deposits on foreign platforms) are taxed in Box 3 of the Dutch income tax. The Dutch system does not tax actual gains — it applies a fictitious return on the total value of your assets as of 1 January.
If the total of your savings and investments exceeds the tax-exempt threshold (heffingsvrij vermogen, currently around €57,000 per person), you pay tax on that calculated return. For most people starting to invest small amounts, this threshold is not reached, and no tax is payable.
Deposits in European banks through platforms like Raisin must also be declared in Box 3. The platform does not automatically withhold taxes — it is your responsibility to include them in your annual tax return (aangifte inkomstenbelasting).
Money Market Fund or Fixed-term Deposit?
It depends on when you need the money:
- If you might need it at any time: money market fund (ETF) or interest-bearing account (Trade Republic). Immediate liquidity or within 1-2 days.
- If you don’t need it for 3-12 months: fixed-term deposit (Raisin). Generally offers slightly higher returns in exchange for committing to the term.
- If you are looking for something in between: a combination of both — part in a money market ETF for emergencies, part in a deposit for the rest.
Frequently Asked Questions
Are money market funds safe?
They are the lowest-risk investment instruments available, but they do not have a state guarantee like bank deposits. In the case of a money market ETF, your investment is custodied with the broker (DeGiro, Trading 212), and if that broker goes bankrupt, there is limited protection (€20,000 at DeGiro). The risk of loss due to market movements is minimal, but not zero.
How much do euro money market funds yield in 2026?
In 2026, with the ECB cutting rates from 4% towards 2-2.5%, euro money market funds (XEON, CSH2) offer annual returns in the 2-3% range. This is lower than the 2023-2024 peak but still significantly more than the current accounts of major Dutch banks (Rabobank, ING), which offer around 0-1%.
Can I invest in money market funds if I am a foreigner in the Netherlands?
Yes. You need a BSN, a Dutch bank account, and an account with a regulated broker in Europe. There are no nationality restrictions. The only consideration is that you must declare all assets in your annual aangifte in Box 3.
What is the difference between a money market fund and a savings account?
A savings account (spaarrekening) at a Dutch bank is guaranteed by the Depositogarantiestelsel up to €100,000 and offers immediate liquidity. A money market fund does not have this guarantee but usually offers higher returns. For amounts below €100,000, guaranteed fixed-term deposits (such as those from Raisin) offer the best of both worlds: a state guarantee and higher returns than local banks.
If you want to see which Dutch banks offer the best interest rates on savings accounts, we have an updated comparison: The banks with the best interest rates in the Netherlands. And if you prefer to start investing with more risk for higher long-term returns, you can see how to invest in ETFs from the Netherlands.
Do you have doubts about which option best suits your situation? Leave them in the comments.
Do you want to start investing in low-cost index funds? Brand New Day is a Dutch provider of low-cost savings, investments, and pensions, with index funds and accounts offering tax advantages.
