» Dictionary of Mutual Fund Terms » Money Market Funds

Money Market Funds

Money Market Funds: A type of mutual funds that purchases short-term debt securities of banks, corporations, US Treasury Bills and agencies of the US government.

These short-term debt securities are for less than a year period and have a fixed price of $1 per share. In money market funds the only thing that fluctuates is the return on the investment.

Many investors use money market funds to balance the risk in their overall investment portfolio. Additionally, cash that is not invested in the market is usually invested in this type of mutual funds.

They are very popular due to their high liquidity. This means that you can withdraw money from your account on a short notice, without incurring any penalties.

Alternative Names - cash

For instance financial managers advised Mark to park his proceeds in the company's money market fund until he decides where to invest them.

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