Money Market Mutual Fund
A money market mutual fund is an investment fund that invests in short-term debt securities such as Treasury bills, commercial paper, and certificates of deposit. Money market mutual funds are typically used by investors who are looking for a safe and liquid investment option. Money market mutual funds are also known as money market funds, money market accounts, or money market deposit accounts.
History of Money Market Mutual Funds
Money market mutual funds were first introduced in the United States in the early 1970s. The funds were created as an alternative to traditional bank savings accounts, which offered low interest rates and limited liquidity. Money market mutual funds offered investors higher returns and greater liquidity than traditional savings accounts. The funds quickly became popular with investors, and by the mid-1980s, money market mutual funds had become the most popular type of mutual fund in the United States.
Money market mutual funds are regulated by the Securities and Exchange Commission (SEC). The SEC requires money market mutual funds to invest in high-quality, short-term debt securities. The SEC also requires money market mutual funds to maintain a stable net asset value (NAV) of $1 per share. This means that the value of the fund’s investments will not fluctuate significantly, and investors can be assured that their investments are safe.
Table of Comparisons
| Money Market Mutual Fund | Traditional Savings Account |
|---|---|
| Higher returns | Lower returns |
| Greater liquidity | Limited liquidity |
| Regulated by the SEC | Not regulated by the SEC |
| Stable NAV of $1 per share | NAV can fluctuate |
Summary
Money market mutual funds are a popular investment option for investors who are looking for a safe and liquid investment. Money market mutual funds offer higher returns and greater liquidity than traditional savings accounts, and are regulated by the Securities and Exchange Commission. For more information about money market mutual funds, investors can visit the websites of the SEC, the Investment Company Institute, or their financial advisor.
See Also
- Mutual Fund
- Bond Fund
- Index Fund
- Exchange-Traded Fund (ETF)
- Treasury Bills
- Commercial Paper
- Certificates of Deposit (CDs)
- Net Asset Value (NAV)
- Securities and Exchange Commission (SEC)
- Investment Company Institute (ICI)
