Many banks and savings banks offer their customers little or no interest. Some investors therefore rely on daily or fixed-term deposit accounts – often with entertaining interest offers. We present an attractive and durable alternative: money market ETFs.
The European Central Bank initially raised interest rates in the euro area significantly since 2022 and gradually lowered them again since 2024. The deposit rate that banks receive for their deposits is now 2.0 percent. Nevertheless, customers of many banks and savings banks have to be content with minimal or no interest.
Some savers therefore rely on fixed-term deposit accounts with a stable interest rate over a certain term. Others open one or more current accounts in order to earn any significant interest. However, these are usually only temporary interest offers that are often over after just six months – which encourages savers to constantly change providers. But there is an alternative that savers can use to avoid this “account hopping”.
How do money market ETFs work?
With money market ETFs, investors can directly from the deposit interest rate Eurozone as well as future interest rate adjustments from the ECB: Selected money market ETFs directly reflect this deposit interest rate or the “Euro Short-Term Rate” (€STR for short). ETF investors benefit virtually one-to-one from money market rates – currently around 2%.
On your own behalf
At finanzen.net zero you trade Money market ETFs without order fees (plus usual market spreads). For example the Xtrackers II EUR Overnight Rate Swap ETF or the Amundi EUR Overnight Return ETF.
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The way these investment products work is very simple: money market funds are linked to the interest rates of the respective currency area. The “current or fixed-term deposit interest” is thus continuously “credited” to the price of the shares of the money market ETF and – with positive interest rates – leads to steadily increasing share prices. If interest rates rise, this has a direct (positive) effect on the daily price change of the ETF. Conversely, falling interest rates have a dampening effect on daily price increases. However, declining share prices for money market funds can only be expected if market interest rates are negative.
Example: Interest rate ETF from DWS Investments
An example: The money market ETF “Xtrackers II” from DWS Investment tracks the performance of a deposit that earns interest at the short-term euro interest rate (€STR) plus 8.5 basis points. This Xtrackers fund is available in two versions: The accumulating Variant, earned income (interest) is automatically reinvested in the ETF. The share value increases, but there is no direct distribution to investors. In the distributing Variant, the income generated is regularly distributed to investors, which reduces the share value at the time of distribution. Investors generally use accumulating money market funds.
Exemplary development of a money market ETF
Money market ETFs offer a Permanent and market-oriented participation in market interest rates. The example of “Xtrackers II” shows how the share value of the accumulating variant changes daily (price development as of July 23, 2025).
What should investors pay attention to?
Shares in money market funds are a flexible investment instrument. As an investor, you can buy and sell your fund shares at any time. But it is for the flexible purchase and sale of shares recommended to minimize transaction fees.
On your own behalf
Recommendation for ETF and interest rate investors
With a free depot finanzen.net zero1 Trade all securities, including ETFs and therefore also the mentioned Xtrackers ETF, without order fees. When trading, only standard market spreads and a small order surcharge of €1 apply. This account is therefore ideal for trading money market ETFs. Find out more about finanzen.net zero here and here for trading the money market ETFs from Amundi and Xtrackers at finanzen.net zero.
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Disclaimer: Past performance is not a reliable indicator of future performance. The selection of topics and securities is for informational purposes only and does not constitute an offer, invitation or recommendation to buy or sell securities. The presentation of topics and securities is intended solely to facilitate your independent investment decision; it does not constitute investment advice. This information is an advertising communication that does not meet the legal requirements to ensure the impartiality of financial analyses.
