What is a money market mutual fund?

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 in the following type of assets:

1. US Government Securities

2. Securities that are issued by entities sponsored by the Congress, but not issued by the US Treasury. (Example – Fannie Mae)

3. Bank certificates of deposits

4. Banker’s Acceptance

5. Bank Time Deposits

6. Notes

7. Commercial Paper

8. Repurchase Agreements

List of Money Market Funds

There are different classes of money market funds, based on where they invest their funds. For example – a fund can invest its money in US T – Bills or in Municipal bonds.

Here is a list of some Money Market Mutual Funds:

  1. Fidelity Cash Reserves (FDRXX)
  2. Fidelity Money Market (SPRXX)
  3. Fidelity Institutional Money Market Portfolio – Class I (FMPXX)
  4. Fidelity Tax Free Money Market (FMOXX)
  5. Fidelity Tax Free Money Fund (FIMXX)
  6. Fidelity Institutional Tax Exempt Portfolio – Class I (FTCXX)
  7. Franklin California Tax Exempt Money Fund (FCLXX)
  8. Franklin Money Fund (FMFXX)
  9. Franklin New York Tax Exempt Money Fund (FRNXX)
  10. Franklin Tax Exempt Money Fund (FTMXX)

In addition – here is a list from Financial Week that contains – Top Money Market Funds.

3 thoughts on “What is a money market mutual fund?”

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