Even though top money market funds serves as an important tool for adding in the investment portfolio, you have to be careful in understanding them and know whether they fit in your investment schedule. A money market fund is nothing but mutual fun which invests only in cash or cash equivalent bonds and securities. They are otherwise called as money market instruments. They have top credit quality in giving the investor with increased returns. The key features of top money market funds include commercial paper, certificates of deposit, U.S. Treasuries and repurchase agreements.
In what ways top money market funds are superior? They are better than other mutual funds in three aspects namely safety, low initial investment and its accessibility.
Top money market funds always make their investments in most stable and big companies’ rather unreliable company. The risk factor involved in these funds is very less. They also give a good return within short duration. These funds deal with securities and bond certificates of banks, large organizations, and even the government security. Hence they do not carry risk like common mutual funds but still efficient in giving high return.
Top money market funds demands only reasonable investment. Even a common man with small amount can invest in money market funds. And that is the reason for many people investing in money market funds. You can invest even smaller amounts expecting to produce high return within short period. It is not an understatement to say that the requirements of top money market funds are lesser than traditional mutual funds requirements.
Top money market funds can be purchased and sold any time as per your wish. They do not come into the circle of market timings. Apart from this, it carries the advantage of same day settlement. In other words, you can get back your money on the very same day of selling it. In this context you will appreciate the accessibility of top money market funds while other mutual fund takes minimum three days for crediting your money.
Having read about the important aspects and advantages of top money market funds, it is essential to know about the other three characters of them before actually investing in them. This is not ideal for the person willing to invest money for long term. Instead it is suitable for adding top money market funds in your investment plan if you are intending to deposit money temporarily. Speaking of risk factor top money market funds can be called as risk-free funds. But you should always enquire fund manager and confirm whether the money is deposited in prime companies which contain high net asset value.