What is a Money Market Mutual Fund?
Sometimes referred to as an MMMF, the money market mutual fund is an interest-bearing account established through a mutual fund company. Often, an open-ended mutual fund of this type focuses on investing activity that includes the purchase and sale of short-term securities in order to turn a profit for investors. The interest or dividend earned from the account can be withdrawn on a regular basis by the investor or used for further investing activity associated with the fund. In most cases, participation in a money market mutual fund requires some type of minimum balance to be maintained in the account at all times. Should the account balance fall below that minimum, some funds will allow the investor a short grace period to build up the balance by placing more money into the account. Depending on the structure of the fund, the investor may not be eligible for earning dividends on stock activity until the minimum balance is restored, but that is not necessarily the case. A money market
A money market fund is a type of mutual fund. Money market mutual funds are required by law to invest in low-risk securities, so they have a relatively low risk compared to other types of mutual funds. However, unlike a money market deposit savings account, money market mutual fund accounts are not federally insured and they do carry a small amount of risk. Money market mutual fund accounts pay dividends that generally reflect short-term interest rates. If investing a large portion of your individual retirement savings plan or savings account for college in the stock market makes you nervous, a money market mutual fund may be a better type of higher interest rate savings plan for you. Money market mutual funds typically invest in highly liquid, low-risk securities, such as certificates of deposit (CDs), government securities, and commercial paper of companies. A money market mutual fund’s net asset value (NAV) is determined at the end of each day. Money market funds are similar to othe
Money market mutual funds are low-risk mutual funds that are simple to invest in. Just like other mutual funds, this type of fund is operated by investment companies, not banks, and is made up of many shareholders who buy individual shares. Since these are not bank products, they are not FDIC insured; however, they are considered a relatively safe investment because they invest in short-term government and corporate debt obligations, like Treasury Bills. A money fund, as it is typically called, does not invest in stocks or bonds so the return is fairly constant and the risk is fairly low. Money market mutual funds generally pay a higher rate of return than a bank-issued money market account, but lower than you might receive in a securities-invested mutual fund. Since a money fund is a mutual fund, it carries management fees, although the fees tend to run lower than other mutual fund fees. You can easily withdraw funds from a money market mutual fund without penalty. For more informatio
A money market mutual fund is a type of mutual fund that invests in ultra-safe or low risk securities. The objective of the fund is to preserve the capital of the fund, and it is rare to see the NAV of a money market mutual fund go below one. The NAV can go below one, if the securities do badly but it is quite rare to see that happen. A Money Market Mutual fund is meant for people who wish to safeguard their capital, and park their short-term cash into a security that gives – steady but low returns. It is also used by people who want to balance their portfolio and build in some safety. If you have a lot of stocks in your portfolio, then money market funds can balance your overall portfolio by providing capital protection. Money Market Mutual Funds offer – securities of domestic and foreign issuers. They are securities that are inherently – high quality (low risk) short term securities that can have a fixed, floating or variable interest rate. A money market mutual fund usually invests
