Money market funds and overnight ETFs: earning the euro rate on cash, and the risks

Euro overnight funds follow short-term rates, with fees and portfolio effects. Amundi CSH reported a 2.06% NAV return over the year to 30 September 2026, as did compounded €STR; neither figure promises a future return.

Amundi CSH · ECB €STR €STR stood at 2.445% on 3 November 2026, with the ECB deposit rate at 2.50% since 16 September. €STR That is more than most banks pay on instant-access money. But a fund unit is not a deposit: no deposit guarantee applies, its value can fall, and tax can remove most of the advantage.

This guide explains what these funds hold, how closely they follow the market rate, the stress episodes that tested them, and how French and German tax changes the result. It ends with the brokers and apps that offer them in France and Germany. It does not recommend a fund: the right home for short-term cash depends on when you need it, your tax position and the alternatives open to you.

Key takeaways

• Euro overnight funds follow short-term rates, with fees and portfolio effects. Amundi CSH reported a 2.06% NAV return over the year to 30 September 2026, as did compounded €STR; neither figure promises a future return.
• Amundi CSH’s issuer factsheet reports a negative NAV return in every calendar year from 2016 to 2021, ranging from −0.41% to −0.70%. These annual endpoints do not measure maximum drawdown or recovery time.
• Tax decides the comparison. In France, an €STR fund taxed at the 31.4% flat tax nets roughly 1.6% to 1.7%, no more than the tax-free Livret A at 1.7%. In Germany, the 2026 prepayment tax removes most of the usual deferral.

What these funds hold

Three kinds of product are sold as a home for euro cash. Money market funds regulated under EU law buy government bills, short-term company and bank debt, deposits and repurchase agreements. Swap-based overnight ETFs, such as XEON and Amundi's overnight ETFs, hold a basket of securities and swap its return for compounded €STR with a bank.

Ultrashort bond ETFs can hold corporate credit beyond one year: ERNE’s index allows fixed-rate bonds up to one year and floating-rate bonds up to three years, adding credit and liquidity risks. (iShares KIID)

The return follows from that design. Since 30 November 2023, XEON has tracked an index that "reflects the performance of a deposit earning interest at the rate of €STR + 8.5 bps", according to its factsheet. Subtracting its 0.10% annual fee gives an indicative rate about 1.5 basis points below €STR, before tracking differences; actual returns and capital remain at risk. (DWS)

The rules for money market funds

EU Regulation 2017/1131 has applied since 21 July 2018. It defines three types: public debt constant net asset value (CNAV) funds, which must hold at least 99.5% in government instruments, government-backed repurchase agreements and cash; low-volatility (LVNAV) funds; and variable (VNAV) funds. Short-term funds may keep a weighted average maturity of no more than 60 days and a weighted average life of no more than 120 days. (24, 25) Standard VNAV funds may go to six and twelve months.

The liquidity buffers exist for days when many investors leave at once. If a CNAV or LVNAV fund's weekly liquid assets fall below 30% and net redemptions exceed 10% of assets in one day, its board may charge a liquidity fee, limit redemptions to 10% a day for up to 15 working days, or suspend them for up to 15 working days. (34) Funds that suspend for more than 15 days within 90 days lose their CNAV or LVNAV status.

Swap-based overnight ETFs are UCITS index funds. Their factsheets do not describe them as money market funds under this regulation, and we could not confirm that classification. Read the fund's prospectus or key information document to see which rules apply before treating an ETF as a regulated money market fund.

How much they earned, fund by fund

The issuer NAV observations cover the year from 30 September 2025 to 30 September 2026, after fund charges and before investor taxes, spreads and commissions. Distributions are reinvested in the reported total returns. XEON’s retrieved factsheet does not give a comparable return, so none is inserted. Past performance does not predict future results.

None of these funds has a deposit guarantee.

The returns differ because the portfolios, benchmarks and costs differ. ERNE adds corporate credit exposure; EUN6 holds government debt. CSH2’s observed excess over €STR is not explained here and should not be extrapolated. Issuer NAV returns can differ from exchange-price returns.

iShares EUN6, 3 November 2026

What can go wrong

Negative rates

When the ECB's deposit rate was below zero, euro cash funds lost money. Amundi CSH’s issuer factsheet reports a negative NAV return in every calendar year from 2016 to 2021, ranging from −0.41% to −0.70%. These annual endpoints do not measure maximum drawdown or recovery time. (Amundi) Returns generally follow the benchmark, with fees, tracking differences and other portfolio effects; they need not equal or stay below its rate.

Liquidity stress

In the United States, the Reserve Primary Fund "broke the buck" on 16 September 2008, according to the SEC: it held $785 million of Lehman Brothers debt and repriced its shares to 97 cents. SEC

In March 2020, European LVNAV funds experienced net redemptions of about €85 billion, 16% of their assets, in two weeks, mostly in US dollar funds; some euro VNAV funds were also strained, while public debt CNAV funds received net inflows. ECB stress ESMA found that no EU money market fund suspended redemptions or applied fees or gates. ESMA

Counterparty and credit risk

A swap-based ETF depends on the bank paying the swap and on the quality of its collateral basket. An ultrashort bond fund depends on the borrowers it lends to. Government-only funds retain sovereign credit and interest-rate risks, even with short maturities. These risks are the reason a fund is not equivalent to a guaranteed deposit, even when its price rarely moves.

Access and protection

Germany's financial supervisor is explicit: "Investmentfondsanteile fallen nicht unter die Einlagensicherung", meaning fund units are not covered by deposit protection. An ETF can be sold while the exchange is open, and European trades typically settle two business days later. Funds offered inside banking apps can also take up to two business days to pay out. An instant-access deposit usually pays the same day and is guaranteed up to €100,000 per bank.

Tax in France

In a French securities account, capital gains are taxed on sale; distributions are taxable when paid. The default flat tax since 2026 is 31.4%: 12.8% income tax plus 18.6% social contributions. EUN6 and ERNE in the table are distributing classes. PFU · service-public.fr Deferral helps, but the rate decides the comparison.

A hypothetical fund return of 2.35% over a year leaves about 1.61% after 31.4% tax. At 2.43%, the result would be about 1.67%. These are constant-rate scenarios, not forecasts; fund capital, counterparty and liquidity risks remain. Both are below the Livret A's 1.7% tax-free, for money within its €22,950 ceiling.

Amundi’s 31 July 2026 factsheet explicitly identifies OBLI as PEA-eligible. Eligibility does not guarantee availability at a particular broker, and PEA withdrawal and tax rules still apply. Before 17 October 2024 it tracked euro government bonds and lost 18.98% in 2022, so its older history is not a cash history. (Amundi, 17/10/2024) PEA gains are free of income tax after five years but still pay social contributions.

In a life insurance contract (assurance-vie), money market units pay 17.2% social contributions instead of 18.6%. Contract management charges reduce the fund return further; the rate depends on the contract. Income tax may also apply to withdrawals. French households held only €29.3 billion directly in money market funds at the end of the first quarter of 2026, against €938.8 billion in regulated savings accounts, according to the Banque de France.

Tax in Germany

Gains and interest are taxed at the 25% flat tax plus solidarity surcharge, 26.375% before any church tax, above the €1,000 annual saver's allowance (€2,000 for jointly assessed couples). Money market and bond funds get no partial exemption: under the Investment Tax Act, only equity, mixed and real estate funds do. Once the allowance is used, a fund earning 2.35% leaves €173 a year after tax on €10,000, against €191 at a 2.60% instant-access rate.

Accumulating funds normally defer tax, but not much in 2026. This assumes an accumulating fund held for the full year; distributions and purchases during the year change the calculation. The prepayment tax (Vorabpauschale) uses a base rate of 3.20% for 2026, published by the Finance Ministry, so the taxable base is 2.24% of the fund's value at the start of the year, capped at its actual gain. BMF A cash fund returning 2.0% to 2.4% is therefore taxed on almost its whole 2026 gain, deemed received on 4 January 2027.

Funds inside apps and broker accounts

Some apps now offer money market funds directly. N26 opened a Fidelity money market fund to all account types from €1 in October 2026, quoting "up to 2.57%" after fund costs; N26 adds no fee until 1 January 2027, then 0.20% to 0.30% a year depending on the plan, with none on Metal. Its own release states: "Ein Fonds ist keine Einlage", a fund is not a deposit.

Some broker "interest" is also partly a fund: Scalable Capital says cash without its PRIME+ plan may be held "in Geldmarktfonds mit OGAW-Schutzstandards", and Trade Republic's French page mentions "fonds de liquidité" among the sources of its rate.

Where to buy them

These platforms publish securities-account services and fees. Individual ISIN availability, trading venue and account eligibility were not verified for every fund; check them before relying on a quoted commission. Fund investments carry capital and liquidity risks, and spreads add to trading fees.

In France

• DEGIRO: its ETF Core Selection has €0 commission plus a €1 handling fee per order; check the current instrument and venue list.
• Fortuneo and BoursoBank: securities-account services; individual fund availability and any fee waiver need confirmation.

In Germany

• Scalable Capital: eligible Amundi, iShares, Vanguard and Xtrackers ETF purchases from €250 are free on FREE; other trades cost €0.99. The purchase waiver does not cover sales.
• DEGIRO: €0 commission plus €1 handling for the current ETF Core Selection; confirm the instrument and venue.

Across Europe

• Interactive Brokers: fixed SmartRouting commissions for French and German shares and ETFs are 0.05%, minimum €3, with no maximum. Direct routing and tiered pricing differ.

Terms checked on 4 November 2026; fees and availability can change.

Checks before you choose

• Is the product a deposit or a fund? Only deposits carry the €100,000 guarantee.
• What does it hold: government bills, company debt, or a swap with collateral?
• What is the total annual cost, including any app, plan or contract fee, against a yield of about 2.4%?
• What is left after your tax, compared with a tax-free or guaranteed alternative?
• How many days does it take to get the cash back into your current account?
• Is this money needed within a year or two, or is it long-term capital that needs a separate plan?

A money market fund aims to manage short-term money, but its value can fall and access can be delayed. Whether it preserves purchasing power depends on the return, costs, tax and inflation over the actual holding period.

In this series

The series compares the main places to keep short-term cash in France and Germany: why the Livret A fell below inflation, savings accounts and how much of the ECB rate they pass on, hedged US Treasury bills and a side-by-side comparison after tax.