The money market funds are funds that are invested only in the money market instruments. These money market funds also have aspects that are similar to conventional mutual funds. The money market funds are governed by the United States Securities and Exchange Commission.
The money market funds bring out units to its investors. These units could be retrieved. The net asset value or NAV of these money market funds are ascertained at the conclusion of every day. There are, however, differences between the money market funds and the money market accounts as well as the money market instruments.
The money market funds do not provide any assurance of returns from investments made unlike the money market accounts. The money market funds also have lower levels of risk. The investors of money market funds usually do not lose money on their investments. The money market funds are principally stable financial options.
However the stability of this form of investment is reliant upon the specific portfolios. In comparison to other lower risk and liquid products the money market funds guarantee better proceeds. The main reason behind this is the fact that they are supported by major financial institutions like banks, major corporations and the government.
A significant number of private investors are not able to purchase the money market instruments owing to the sizable minimum purchase amounts. The money market fund rates are comparatively much lower. It has been observed that the price of the money market funds is lower than the average requirements for the mutual funds.
The Net Asset Value of the money market funds is normally fixed. The most usual rate is $1for every fund. This provides the investors with more latitude than the conventional mutual funds. Like the usual money market instruments the money market funds also provide the investors with same day settlements.
There are two separate versions of the money market funds � the taxable money market funds and the tax free money market funds. The money market funds that are taxable come under the jurisdiction of the local, state and federal tax systems.
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Last Updated on : 26th June 2013