Yield Without Risk: How a 19% Key Rate Sent Russia's Retail Money Into Record Fund Inflows

In September 2024, something unusual happened in the fund industry of Russia: retail mutual funds collected the largest monthly net inflow in their entire history — almost 67 billion roubles — and the vehicle that pulled the money in was not an equity fund, not a bond strategy and not a thematic story about growth. It was the humble money market fund, the closest thing the investment world has to a parking lot for cash. At first glance the record looks like a triumph of collective investing. Look closer and it reveals something more interesting: a retail market of tens of millions of people voting with its wallets for yield without risk, at the very moment the central bank was pushing the cost of money to levels not seen in two decades. This deep dive reconstructs the anatomy of that record month — who invested, where the money went, why floaters and repo-based funds became the instruments of choice, what the equity segment was doing at the same time, and how the September record was eclipsed just three months later, drawing on the fund-market review published by Kommersant daily on October 9, 2024, and on the exchange's retail-investor statistics that followed.

The September record in numbers

According to InvestFunds data cited by Kommersant, September 2024 set a new all-time record for net inflows into retail collective investment funds — both open-end mutual funds and exchange-traded funds aimed at individual investors. The monthly take of nearly 67 billion roubles was 1.7 times the August result and 5% above the previous record, set in December 2023. Crucially, September was the eighth consecutive month of positive net attraction: over that stretch the funds had accumulated almost 293 billion roubles of new money. The key parameters of the record month:

• net inflow into retail funds (open-end and exchange-traded) in September 2024: almost 67 billion roubles — an all-time monthly high;
• versus August: an increase of 1.7 times; versus the previous record of December 2023: plus 5%;
• streak: eight consecutive months of positive net inflows, totalling almost 293 billion roubles;
• money market funds alone: 69.4 billion roubles of net inflow — a quarter more than in August and 3% above their own December 2023 record;
• bond funds: 9.5 billion roubles of net inflow, nearly six times the August figure of 1.4 billion and the best monthly result since November 2021;
• equity funds: net outflow of 5.3 billion roubles, half the August figure; mixed funds: outflow of 5.8 billion roubles, 35% smaller than in August.

The arithmetic of these figures contains a subtle but important detail. Money market funds attracted 69.4 billion roubles while the retail fund industry as a whole took in 67 billion — meaning that every other category, netted together, was still in mild outflow territory. The record month was not a broad-based return of appetite for market risk. It was a targeted migration of household savings into the single instrument that promised a rate-linked return with virtually no chance of loss, and the headline number flatters the diversity of that migration.

The rate that lifted the money funds

The engine of the whole story was monetary policy. In September 2024 the Bank of Russia raised the key rate by a full percentage point, to 19%, and explicitly declined to rule out further increases in the coming months. (The regulator made good on the signal: on October 25, 2024 it lifted the rate to a historic 21%.) In that environment, cash-like instruments stopped being a place to hide and became a place to earn: the higher the policy rate climbed, the more attractive the simplest strategies looked relative to everything else.

Money market funds are precisely such a strategy. Their September inflow of 69.4 billion roubles beat their own previous record by 3% and August's result by a quarter. "Expectations of further key-rate growth before the end of the year stimulated investor interest in money market funds, which deliver yields at a comparable level," Andrei Makarov, head of sales at the Pervaya asset management company, told Kommersant. The mechanism behind that sentence is worth unpacking, because it explains why these funds became the default destination for retail money.

What a money market fund actually does

A money market fund does not buy stocks and does not lock into long bonds. It lends cash short — typically through repurchase agreements (repo) backed by high-quality collateral — at rates that track the interbank benchmark closely tied to the key rate. The practical consequences for an investor:

1. Near-zero interest-rate risk. Because the loans mature in days, not years, the portfolio's value does not fall when rates rise. A long bond fund loses price when the central bank tightens; a money fund simply starts earning the new, higher rate.
2. Yield that follows the policy rate. Each rate decision by the Bank of Russia propagates into the fund's return almost mechanically. In 2024 that meant an ascending yield curve of monthly returns with no action required from the investor.
3. Daily liquidity. Units can typically be sold on any trading day, unlike a term deposit that punishes early withdrawal. For households that wanted deposit-like returns without deposit-like lock-ups, this was the decisive feature.
4. Compounding without a coupon calendar. Income accrues daily inside the unit price rather than arriving as periodic coupon payments, which simplifies the experience for first-time fund investors.

The competitive benchmark was the deposit market, and it was a strong one: with the key rate at 19%, banks were offering term-deposit rates around and above that level. Yet deposits fix the rate for the contract term — a poor proposition when the regulator is still hiking and a six-month lock-in means missing the next increase. Money funds, by contrast, reset with the market. The record September flows suggest a large cohort of savers understood the difference and chose flexibility plus a rising yield over a fixed coupon.

The bond-fund surprise and the floater phenomenon

The second notable result of September came from bond funds: 9.5 billion roubles of net inflow, almost six times August's 1.4 billion and the best monthly figure since November 2021. On the surface, that looks like the beginning of the great rotation back into fixed income that strategists had been promising for two years. Kommersant was careful to deflate the reading: the main beneficiary of the month was a single exchange-traded fund, the "Passive Income" BPIF managed by T-Capital, which attracted more than 14 billion roubles on its own. The company explained the mechanics: at the start of the month an anchor investor acting as market maker buys newly issued units directly from the management company, and those units are subsequently sold to market investors on the exchange. All exchange-traded funds work this way, but managers usually issue only small volumes — so a large anchor transaction can dominate the monthly statistics for the whole category.

The deeper trend underneath the headline, however, was real: investors were steadily favouring bond portfolios built around floaters — bonds with a variable coupon that resets in line with a short-term benchmark. Floating-rate paper carries the same virtue as money market instruments: no duration risk, and a coupon that rises with the key rate instead of losing value against it. Maxim Bykovets, director of wealth-product sales development at PSB, estimated for Kommersant that after the September hike to 19%, floater coupons from October were running at 20–21.5% per annum — levels that made corporate credit look like a money market instrument with a spread.

The liquidity asterisk

There was a catch, and professionals were quick to name it. Viktor Bark, head of the asset management department at Alfa Capital, pointed out that liquidity in corporate floaters — especially second-tier issuers — is thin, and large funds that pile into those issues take on exit risk: "difficulties may arise when leaving them during a period of falling rates." In other words, a floater portfolio is easy to sell into a rising-rate market where everyone wants the same protection, and painfully hard to unwind when the cycle turns and buyers vanish. That is why, Bark noted, some managers chose a different route to the same destination — raising the cash share of their portfolios and placing it in the money market, capturing the high short rate without the secondary-market liquidity trap. The September numbers show both strategies coexisting: record money-fund flows, a floater-driven tilt in bond portfolios, and a category-level bond inflow distorted by one anchor transaction.

Equity and mixed funds: the outflow brake

The risk end of the spectrum told a quieter but directionally important story. From the start of autumn, redemptions from riskier instruments slowed sharply. Equity funds lost just 5.3 billion roubles in September — half the August outflow. Mixed funds saw net redemptions of 5.8 billion roubles, 35% below the previous month. The brake had a clear cause: the Moscow Exchange Index recovered 8% over September, climbing to around 2,850 points, and the reversal changed investor behaviour at the margin.

The breadth of the recovery showed up in an unusual statistic. In August, only five funds had managed to attract more than 100 million roubles of net inflow each; in September the club grew to seven funds, with combined attraction of 1.7 billion roubles. These are still modest numbers against the 69-billion-ruble money-fund tide — but the direction matters. A market where redemptions halve, inflow clubs widen and the index rebounds 8% in a month is a market where sellers are becoming exhausted.

Would that turn into a genuine equity rally before the year ended? Market participants interviewed by Kommersant were sceptical. Bark's formulation set the condition: "The trend will reverse as soon as the market sees the first signs of inflation slowing or receives a signal from the regulator about starting to cut — or at least pausing — the key rate." In September 2024 neither condition was close: inflation was re-accelerating and the regulator was still hiking. The equity segment's role in the record month was therefore passive — it merely stopped bleeding, while the money market did all the attracting. Retail investors were, in effect, parking capital on the sidelines at 19% and waiting for the monetary cycle to turn before redeploying it into shares and long bonds.

The retail army behind the flows

Who exactly was carrying 67 billion roubles a month into funds? The exchange statistics that followed the record autumn answer the question with scale. By November 2024, the number of individuals holding brokerage accounts on the Moscow Exchange had reached 34.7 million — up by roughly half a million in a single month — with 63.2 million accounts open in total and 3.7 million people trading actively. As Kommersant reported on December 4, 2024, retail investors accounted for 75.8% of equity trading volume, 35.8% of the bond market and 64.5% of derivatives turnover that month, and put 97.5 billion roubles of net new money into exchange instruments: 46.1 billion into bonds, 57.8 billion into exchange-traded funds, while direct share purchases were negative at minus 6.4 billion roubles.

The structure of those flows repeats the September picture at a two-month remove and adds several telling details:

• funds, not shares, were the marginal buyer. Exchange-traded funds took the majority of net new retail money in November, while direct equity purchases continued to shrink;
• the individual investment account (IIS) base kept growing — up 33,700 in November to 5.92 million accounts — with IIS turnover up 30% year on year to 265.3 billion roubles; within IIS portfolios shares still held 66%, bonds 11% and fund units 23%;
• geography was concentrated: Moscow (591,200 IIS accounts), the Moscow region (350,200) and St. Petersburg (286,500) led the country;
• the most popular individual names remained the blue-chip staples — Sberbank common and preferred shares, Lukoil, Gazprom, Rosneft, Yandex, Norilsk Nickel, T-Technologies, Polyus and Surgutneftegas preferred;
• sentiment at the professional end was cautiously constructive: analysts at the Aton investment company described the market as a "compressed spring" held down by high rates and geopolitics, and allowed for the Moscow Exchange Index to rise more than 30% during 2025.

Read together, the fund records and the exchange statistics describe a market with an unusual division of labour. A retail base of historic size — more than a third of the adult population holding brokerage accounts — had lost the appetite for direct share-picking that defined 2020–2021, but had not left the market. Instead it was channelling savings through fund wrappers, and in the autumn of 2024 those wrappers were overwhelmingly cash-like. The industry's record month was, in that sense, not a sign of risk enthusiasm but of risk patience: money accumulating at the money-market rate, waiting for the signal that would send it back into equities.

What happened next: the record that was only a prologue

September's record did not stand for long. The tightening cycle continued — the key rate reached 21% at the end of October — and the same logic that produced the September high kept compounding: the higher the rate, the better money funds paid, and the more rational it looked to hold savings there. By December 2024, monthly net inflows into retail funds had swollen to more than 235 billion roubles, and the full year closed with a net attraction of 753 billion roubles — 3.6 times the previous annual record of 2023 — lifting the net asset value of retail funds by 73% to 1.9 trillion roubles, as Kommersant summed up in its annual fund-market review on January 15, 2025. The September numbers that looked like a peak in early autumn turned out to be a waypoint on a steep ascent.

The episode left several lessons that remain relevant whenever a tightening cycle pushes short rates toward historic highs:

1. In a hiking cycle, the cash-like product wins. The instrument with no duration risk and a rate-tracking yield absorbed the record flows; everything competing against it — deposits with fixed terms, long bonds, equities — was fighting the central bank.
2. The fund wrapper beat the deposit on flexibility. Investors accepted marginally different economics in exchange for daily liquidity and a yield that reset upward automatically with each rate decision.
3. Headline category flows need forensic reading. One anchor transaction in a single exchange-traded fund produced the best bond-fund month since November 2021 — statistics of collective investment can be dominated by plumbing rather than sentiment.
4. Floaters are money funds with credit and liquidity risk attached. Coupons of 20–21.5% compensated for thin second-tier liquidity, and professional managers sized that trade accordingly — or avoided it by holding cash in the repo market.
5. The rotation back to risk waits for the regulator, not for valuations. An 8% index rebound halved equity outflows but did not produce inflows; by the market's own account, the turn required a disinflation signal or a pause from the Bank of Russia.

The bottom line

September 2024 entered the history of the Russian fund market as the month retail investors carried a record 67 billion roubles into collective funds — and, in doing so, revealed the true shape of a high-rate economy. The money was not chasing growth; it was chasing 19% without risk. Money market funds provided the vehicle, floaters provided the spread, equity funds merely slowed their bleeding, and a retail base of 34.7 million account holders provided the scale. The record that autumn looked like an end point of the tightening cycle's first phase; in fact it was a prologue to a year that would close with 753 billion roubles of annual inflows and a 73% expansion of retail fund assets. For students of emerging capital markets, the episode is a clean case study in how monetary policy reallocates household savings in real time — and a reminder that in a market where the risk-free rate approaches 20%, the most aggressive-looking investment decision is often the most conservative one.