Money market funds are option for "nervous" savers

Money market funds could be sensible option for savers who don’t like the idea of depositing all their money in one place, one independent financial advisor has suggested.

Fidelity International says that for "nervous" Brits who are against entrusting their cash to a single financial institution, a money market fund could be the answer.

The funds allow people to safeguard against the event of a single bank collapse by spreading their funds across a range of different financial institutions.

"Savers who opt for a money market fund have effectively hired an expert investor to seek out constantly the best interest rates in the market on their behalf," said Richard Wastcoat, Fidelity International’s managing director.

He continued: "These funds spread a saver’s money across highly liquid cash-like securities issued by a wide range of financial institutions and top companies and so provide some protection from the collapse or closure of a single financial house."

Meanwhile finance minister Alistair Darling has said the authorities will learn lessons from the Northern Rock bank crisis.