Money market Funds basically invest in money market instruments like Treasury Bills, Certificates of Deposit, Commercial Papers, and Interbank call money market.
The tenor of money market instruments varies from 1 day to 1 year and hence they are highly liquid. These are also considered the least risky. Returns are nominal in money market investments. The risk involved in money market funds is inflation may outpace the actual fund returns there by the investor’s purchasing power would be reduced.
Money market funds are not for investment purpose. They serve as a better option to make money on short term surpluses. Investors who want to redeem their money in short time and to earn some money in that short duration go for money market funds.
Sathish Emmadi
Sathish Emmadi is a co-founder & editor at Lastbull.com. He is presently working in IT for one of the world’s top mutual fund companies. Handled multiple projects in BFSI (Banking,Financial Services and Insurance) domain. An Engineering Graduate from NITW.
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