Looking behind the yield curtain

I’ve been saying this for years, and I’ll say it again for the people in the back: Many of our competitors advertising higher yields are pushing mutual funds that carry both principal risk and liquidity risk. They're basically asking you to risk a loss and freeze up your funds in pursuit of a few extra basis points.

But that's not a tradeoff you need to make. Because our Brex business account lets you invest in a government money market fund (MMF) to offer you the highest returns at the lowest risk — with same-hour liquidity.

The math that matters

If you're comparing treasury products like the Brex business account, here are a couple of calculations that should make you pause.

Competitors in the market are promoting a “high yield” treasury product that actually invests in a mutual fund trading at $9.98 a share. It was trading at $10.00 a share 6 months ago. If you bought it then, you'd have already lost 20 basis points on principal alone. Annualized? That'd be a 40 basis point loss.

Instead of earning the high yield advertised, you’d have earned a lot less in reality. You could have even lost money overall depending on when you bought. All while tying up your cash due to the liquidity limitations of mutual funds.

Similarly, I saw another “high yield” mutual fund drop almost 1% in price per share in a week, effectively slashing the yield to -12% APR during that timeframe. You’d have to stay invested for months just hoping to break even.

So remember, when someone advertises an extra 20 basis points of yield through a mutual fund, they're asking you to gamble your principal for a return that can be totally wiped out by price volatility.

MMFs vs. mutual funds: It's about stability

How is Brex able to offer both high returns and low risk? By enabling you to invest in a true government money market fund that’s required to invest in 99.5% of its portfolio in securities issued or guaranteed by the US government, or cash.

Because government MMFs are subject to rigorous SEC regulations and requirements for portfolio composition and liquidity management, they are able to maintain a consistent net asset value (NAV) of $1. On the other hand, mutual fund prices constantly move up and down because they expose your investment to the stocks and bonds of everyday companies, which are far less stable — leading to significantly more volatility. And that volatility is the enemy of capital preservation.

Let's do a comparison:

Government money market funds

• Seeks to maintain a stable NAV of $1.00
• Designed to protect your principal
• Price per share is controlled
• Access your invested funds within a day — or within an hour if you use Brex

Mutual funds

• Fluctuating share prices based on market conditions
• Your principal is at risk every day
• No price controls — your $10,000 can lose value
• Takes up to 3 days to access your funds

Why this matters for growing companies

Your primary job as a business leader isn't to maximize yield at any cost — it's to earn a competitive return while protecting your principal and liquidity. When yield differences are measured in basis points, even small price movements in mutual funds can eliminate any yield advantage while putting your principal at risk.

And when your business is moving quickly, you can’t afford to have the value of your operating funds drop overnight, potentially forcing you to further lock in until the market improves. What you really want is the flexibility and agility that comes from having a steady NAV and same-day liquidity.

The competitor playbook

Since we announced that Brex offers the highest-returning, lowest-risk treasury product with same-hour liquidity, competitors have been trying every trick in the book to get your attention with a higher yield, often concealing the higher risk.

Here's what’s happening in the market (and probably your inbox):

• Competitors are offering "high-yield" products with quoted yields higher than ours.
• They're using gimmicks like one-time bonuses and product giveaways.
• They're pushing these products hard because they know the risks.

They're essentially losing money to win business and collect logos. But at what cost to their clients?

Choosing the right banking partner

When evaluating treasury solutions, ask these questions:

1. How can I preserve my capital? Consider MMFs with a steady NAV in contrast to mutual funds that fluctuate.
2. What's the real risk-adjusted return? Factor in potential principal loss and liquidity constraints.
3. Am I working with a long-term partner? Sustainable business models matter.

Brex delivers in all three areas, offering superior reliability, liquidity, and return.

The choice is clear

Read the fine print beyond the headline. Government MMFs might not have the flashiest marketing, but they offer what growing companies are looking for: competitive, stable returns with capital preservation. Even better, Brex offers same-day liquidity too.

Your job as a business leader is to sleep well at night trusting that your company's cash is growing safely. Mutual funds with floating NAVs won't give you that peace of mind.

We believe the choice is clear: stable principal with government MMFs beat gambling with mutual funds. Choose wisely.

Open a Brex business account in minutes and start earning up to today.

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Definitions for this article

• Principal: The base amount of money you invested

• Liquidity: How quickly you can turn invested funds into spendable cash (i.e., a liquid asset)

• Yield: The income an investment generates, expressed as a percentage

• Return: The total gain or loss on an investment over a period

• Basis points: A standard measure for percentages in finance, 1 basis point = 1/100 of 1%, or 0.01%