money market fund

Definition

An open-end mutual fund which invests only in money markets. These funds invest in short term (one day to one year) debt obligations such as Treasury bills, certificates of deposit, and commercial paper. The main goal is the preservation of principal, accompanied by modest dividends. The fund's Net Asset Value remains a constant $1 per share to simplify accounting, but the interest rate does fluctuate. Money market funds are very liquid investments, and therefore are often used by financial institutions to store money that is not currently invested. Unlike bank accounts and money market accounts, most deposits are not FDIC insured, but the risk is extremely low (only those funds administered by banks are FDIC-insured, but some others are privately insured). Although money market mutual funds are among the safest types of mutual funds, it still is possible for money market funds to fail, but it is unlikely. In fact, the biggest risk involved in investing in money market funds is the risk that inflation will outpace the funds' returns, thereby eroding the purchasing power of the investor's money. also called money fund.

Cite this definition


Related terms:

banker's acceptance, historical yield, cash equivalents, banker's acceptance, cash equivalents, historical yield, money market deposit account


'money market fund ' appears in the definitions of these other terms on BusinessDictionary.com

sweep account

Related Articles from the InvestorGuide.com University

Basic Mutual Fund Concepts
Describes some of the terminology necessary to understand mutual fund investments, including open-end, closed-end, net asset value, public offering price, dividends and capital gains distributions, family, share classes, and dual-purpose fund.

Fees and Expenses
Before you invest in a fund, you should investigate the fees and expenses that they may charge. Learn about loads, management fees, 12b-1 fees, and others. Discover how to use a fund's expense ratio and turnover ratio to find beneficial information before you invest.

Bond Mutual Funds
A conservative investment to yield regular payoffs, there are three types of bond mutual funds: US government bond funds, municipal bond funds, and corporate bond funds.  Click to find more about which investment is best for you.



Related Resources from InvestorGuide.com

Mutual Fund Research Tool
Use our research tool to find in-depth data about mutual fund quotes, news, data, and profile information. Click here to view our mutual fund list or enter a mutual fund ticker here:

   

Featured Sponsor

Give this definition a rating from 1 to 5 (5 being the best)...
1    2    3    4    5    



Browse by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Add this Glossary to your Site | Bookmark InvestorWords.com
Home | Terms by Subject | Keyword Advertising | About Us | Contact Us
Work for InvestorWords.com
BusinessDictionary.com | InvestorGuide.com | WebFinanceInc.com
Disclaimer and Copyright©

Copyright©1997-2008 by WebFinance, Inc. All Rights Reserved.
Unauthorized duplication, in whole or in part, is strictly prohibited.