The transformation of money market funds

Read this article to understand:

• Why MMFs matter more than ever  
• The evolution of digital distribution platforms
• The rise of tokenised MMFs  
   

With assets under management surpassing $8 trillion in the US alone and over €2 trillion in Europe, MMFs represent a substantial share (around 15 per cent) of total mutual fund assets.¹ More importantly, they have become a proving ground for technologies that promise not just to reshape how these funds operate, but to redefine what they fundamentally are.

Why money market funds matter more than ever

MMFs have demonstrated remarkable resilience and consistent growth over the decades, successfully navigating various market cycles since their emergence in the 1970s. The aggressive global monetary tightening cycle that began in 2022 accelerated inflows. But in truth, MMF assets had already been growing steadily even during the prolonged period of near-zero rates following the 2008 financial crisis. 

The scale of the resulting inflows has been remarkable. US MMF assets surpassed $8.0 trillion for the first time on 1 December 2025, after assets increased by $954 billion since the start of the year. By April 2026, total assets stood at $8.44 trillion.

This growth has attracted new entrants and accelerated product innovation. The launch of money market exchange-traded funds (ETFs) has brought the convenience and intraday trading flexibility of the ETF wrapper to cash-management strategies. 

Digital platform distribution

The renewed relevance of MMFs has fundamentally altered the role of technology within the MMF ecosystem. As assets have grown and investor engagement has intensified, competition has shifted away from product features alone toward how investors access, manage and interact with MMFs through digital platforms.

Distribution platforms have become a critical control point in the MMF value chain. Over recent years, the industry has seen a surge in new portal launches, platform upgrades and renewed technology investment. Banks, asset managers, fintechs and independent providers are all competing to own the client interface.

Historically, MMF platforms have been functional rather than differentiated, focused primarily on execution, standard reporting and cash-sweep capabilities. Today, that mindset has shifted. 

Platform access is now almost as important as the fund itself. With yields tightly clustered (the difference between top and bottom quartile only being a handful of basis points), differentiation is increasingly driven by platform experience, system integration and transparency.

Platforms that embed themselves into day-to-day treasury workflows are no longer just facilitating execution but shaping how liquidity is accessed, managed and allocated, and are increasingly viewed as core infrastructure rather than optional tools.

For clients, particularly treasury teams and institutional investors, leading portals such as Tradeweb ICD and Calastone translate this shift into measurable benefits. By consolidating access to a wide range of investment products within a single interface, they remove fragmentation and enable users to research, execute and manage positions seamlessly across funds, deposits and securities.

Integration with treasury systems and straight-through processing automates workflows, reducing operational complexity and enabling faster, more efficient deployment of liquidity. Advanced analytics, real-time reporting and full portfolio visibility enhance oversight and decision-making. 

At the same time, advancing technology has exposed the limitations of traditional infrastructure. Batch-based processing and manual workflows no longer align with client expectations. 

Institutional investors increasingly demand straight-through processing, real-time execution, immediate confirmation and continuous visibility of liquidity positions. For MMFs where same-day settlement, intraday liquidity and fast-moving flows are fundamental these capabilities are no longer optional.

As a result, connectivity has become foundational. Real-time integration between portals, fund managers, transfer agents and treasury management systems allows MMFs to operate at the speed investors now expect. It also supports improved transparency, stronger risk management and more efficient liquidity utilisation as assets continue to scale.

Looking ahead, investment, consolidation and innovation in the platform space are likely to continue as distribution becomes increasingly technology-led and competitive.

The development of MMF portals can broadly be categorised into three generations:

Tokenisation: the third revolution in asset management

If digital platforms represent the evolution of MMF distribution, tokenisation represents something far more radical: a potential re-architecture of the entire fund infrastructure.

Boston Consulting Group has referred to fund tokenisation as the ‘third revolution in asset management’, following mutual funds and exchange-traded funds. It estimates that tokenised fund assets could reach one per cent of global mutual fund, and exchange traded money market funds’ assets under management within seven years. That projection, made in late 2024 when tokenised funds held just over $2 billion in assets, already appears conservative given the current trajectory.²

What tokenisation means for MMFs

Tokenisation involves converting traditional financial assets such as shares in a MMF into digital tokens recorded on a blockchain. Tokenised MMFs focus on record-keeping and ownership transfer rather than creating speculative assets. Investors hold digital tokens representing fund shares, enabling capabilities that traditional systems cannot support.

The core benefit of a tokenised MMF is that it is transferable in a safe, efficient, and fast manner. While traditional MMFs are theoretically transferable, in practice, it is difficult to do so and simply does not happen. 

Tokenised MMFs are regulated securities, pay yield directly to investors and invest only in assets permitted under their prospectus. Underlying holdings are transparent, and assets are held in safekeeping with third-party custodians. As a regulated security, they also naturally require full know your customer (KYC) and anti-money laundering checks (AML) when taking on new clients.

Operational advantages of tokenised MMFs

Traditional EU LNAV (Low Volatility Net Asset Value) MMFs operate within standard UCITS (Undertakings for Collective Investment in Transferable Securities) dealing frameworks. Subscriptions and redemptions occur on stated ‘Dealing Days’, subject to daily cut-off times. Holdings and investor records are updated via end-of-day fund accounting processes, and while settlement is often on the same day, transactions remain dependent on custodian infrastructure.

Tokenisation addresses many of these structural constraints, enabling near-continuous trading, enhanced transparency, fractional ownership and efficient ownership transfer.

The following table summarises the key operational advantages that tokenised MMFs deliver over traditional MMFs:

The tokenised MMF market has grown rapidly. As of September 2026, the broader tokenised real-world asset market reached approximately $38 billion, with tokenised treasury and money market products representing a fast-growing segment.³

Aviva Investors has been proactive in this space, working towards the launch of its own tokenised funds in partnership with Ripple. This initiative is supported by cross-functional teams spanning investment, risk, legal, operations, and distribution, alongside a structured internal training programme designed to build firm-wide capability in digital assets and tokenised fund structures.

Challenges to adoption

Despite accelerating momentum, tokenisation still faces meaningful barriers. Tokenised treasury and MMF assets, at $7.4 billion as at August 2025,⁴ remain a small fraction of the $7.96 trillion traditional MMF industry.⁵ Regulatory frameworks continue to evolve, creating uncertainty for institutions assessing large-scale adoption. 

For example, 23 per cent of members of the Institutional Money Market Funds Association trade body, felt that regulatory uncertainty created barriers. A further 23 per cent highlighted a lack of market readiness.⁶

Industry surveys highlight additional challenges, including integration with existing infrastructure and skills gaps across organisations. There is also an unresolved industry debate about whether blockchains used in finance should be public or private systems, which in turn involves trade-offs between interoperability, control and security.

Where MMFs fall behind 

While MMFs have evolved significantly in distribution and access, the underlying market infrastructure supporting their portfolios, particularly across commercial paper (CP), certificates of deposit (CD) and repo markets remain structurally lagging.

The European CP and CD ecosystem remains characterised by fragmentation across issuers, dealers and platforms. Market activity is concentrated in primary issuance, with investors typically holding securities to maturity, resulting in lower levels of secondary market trading than are seen in more actively traded asset classes.

However, this should not be interpreted as evidence of a fundamental liquidity issue within money markets or MMFs. These markets continue to support substantial issuance and investment activity, and MMFs maintain robust liquidity management frameworks designed to meet investor redemptions. 

Rather, the challenge is that the market structure remains more relationship-driven and less technologically advanced than many other areas of capital markets.

In practice, this means MMFs, despite being large and sophisticated participants, operate within a market structure that can provide less transparency, slower price discovery and fewer opportunities for automated execution than more electronically developed markets.

The opportunity therefore lies not in addressing a deficiency in the underlying market, but in improving transparency, connectivity and operational efficiency through greater digitisation.

Conclusion

The MMF industry stands at a clear inflection point. Record asset levels, renewed investor relevance, regulatory evolution and rapid technological innovation are converging to drive structural change.

Technology is no longer optional in the MMF landscape; it is becoming a primary source of competitive advantage. Even best-in-class fund products will fail to capture the full opportunity if they are distributed through mediocre platforms that are not implementing the latest technology. 

Additionally, without a fully modernised market infrastructure to underpin them, MMFs risk remaining an increasingly sophisticated solution built on outdated foundations. The firms that will lead the next phase of the MMF evolution are those that view technology not as a cost to be minimised, but as a capability to be maximised.