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How Money Market Funds Work. Although money market funds typically pay lower interest rates than certain other fixed-income investment vehicles, the tradeoff is their safety and stability ...
A money market fund (also called a money market mutual fund) is an open-end mutual fund that invests in short-term debt securities such as US Treasury bills and commercial paper. [1] Money market funds are managed with the goal of maintaining a highly stable asset value through liquid investments, while paying income to investors in the form of ...
How money market funds work. Money market funds are regulated by the Securities and Exchange Commission, or the SEC, and are required to invest in short-term debt securities, such as certificates ...
For those seeking the security of federal insurance and consistent, if varying, interest rates, a money market account may be an ideal choice, especially for emergency funds. The money market fund ...
In November 2007, Bank of America injected $600 million into Columbia Management Group to prop up money market funds and institutional cash investments because of their exposure to structured investment vehicles. [7] In 2008, the company lost $459 million due to capital requirements required to prop up its money market funds. [8]
3. Money market funds. Not to be mistaken with money market accounts, money market funds invest in safe, short-term loans to the federal government or major corporations. These loans — known as ...
Money market funds come with very low risk, but there have been instances where funds “broke the buck,” meaning their NAV dropped below $1.00, such as during the 2008 financial crisis.
A money-market fund (MMF), meanwhile, is a type of ultra low-risk mutual fund that doesn't come with FDIC protection. MMFs consist of relatively safe assets like short-term debt securities.