What are Money Market Funds?
In a world of super-low interest rates, many cash-heavy investors move their funds over to money market fund accounts. Money market funds returns are decent, and the accounts are safe. Money market funds are savings vehicles for View More
How a Money Market Fund Works?
The money market funds function just like a normal mutual fund. They offer redeemable shares or units to all the investors and get mandated to follow all the guidelines, which are drafted by the monetary regulators. View More
Types of Money Market Instruments
The money market mutual funds are known as an exchange where cash-equivalent instruments and trade in cash occur. Instruments, which get traded in the money market, have different maturities, right from overnight to 1 year. So, what are these instruments? Let’s find out! View More
Who should invest in Money Market Funds?
Money market funds are designed for investors who want to preserve their principal and earn some interest in it. They may be appropriate for investors who: View More
Features of Money Market Funds
The money market mutual funds provide a safety net for short-term credit needs. It is the source of short-term finance for banks, financial institutions, and companies. The structure of the money market and the interest rates on various types of instruments depend on the demand for and supply of funds. View More
Taxability of Money Market Funds
Money market funds are treated as debt mutual funds and taxed accordingly. The capital gains tax is levied at income tax slab rates if the investments in money market funds were held for less than three years (short-term capital gains). View More
Risks involved with Money Market Funds
The most significant risk of money market funds is that their value can decrease, just like other investment securities. As with any investment, there are risks involved with money market funds. The primary risks include: View More
Advantages of Money Market Funds
The primary objective of money market funds is to maintain liquidity and safety while offering higher interest than a savings account. Money market funds have advantages such as: View More
Disadvantages of Money Market Funds
Just like all the other funds in the market, the money market ones also come with several downsides. These are: View More
History of Money Market Funds
In India, the money market settlement fund was set up back in 1985 to increase the range of stock investments and liquidity. But it gained a lot more exposure in the country after the 1990s financial reform. View More
Frequently Asked Questions
Are money market funds safe?
In short, yes, they are. The money market funds invest in short-term and highly stable debt securities, which have low risk. As the investments keep going, the money market mutual fund rates are viewed as safe, even when they are not completely risk-free.
Why can yields on money market mutual funds be very low?
The money market yields are pretty low because they hold up all the securities with maturities for up to 1 year.
Why doesn't the government offer insurance on money market mutual funds?
There is no insurance available on the money market funds because they are insured by FDIC or the federal government.
Is a money market account the same as a money market fund?
The money market accounts are deposit accounts, which are situated in banks. They are ideal for short-term savings and emergency funds that you want to access within a short time.
How short is "short term" for the securities in which money market mutual funds can invest?
The short term for all the securities where the MMF can invest is between 1 year to 3 years.