Money Market Fund
A money market fund is a type of mutual fund that invests in highly liquid, low-risk, short-term financial instruments, such as Treasury bills, commercial paper, and certificates of deposit (CDs). Money market funds aim to provide investors with a safe place to invest easily accessible cash while offering modest returns. These funds are often used for cash management purposes because of their high liquidity and relatively stable value.
Example
An investor places excess cash into a money market fund to earn interest while keeping the funds easily accessible for future needs.
Key points
• A mutual fund that invests in low-risk, short-term financial instruments.
• Offers high liquidity and is often used for cash management.
• Provides a stable value and modest returns compared to other investment types.
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