Money market fund is a mutual fund that is open ended and invests in debt securities that are short-term such as the US treasury bills and commercial papers. Money market funds are considered as safe bank deposits that offer higher yields. They are funds whose regulation is guarded by the Investment Company Act of 1940 and serve as significant source of liquidity to fiscal intermediaries.
According to Wikipedia, the purpose of money market funds is to limit exposure to losses, which comes from risks associated with liquidity, market, and credit. The security and exchange commission regulates the money market in the US. Part of the Act controls and regulates the maturity, diversity, and quality of the funds. This Act allows the buying of the debt that is highest rated, which matures in less than thirteen months. The portfolio also has to uphold a weighted average maturity of about sixty days or less and not have an investment of more than 5% on one issuer. This is however in exclusion to government securities and repurchase.
The money market fund is different from most other financial instruments since it seeks to maintain a one percent per share value. These funds can pay the necessary investors their dividends. Money markets can invest in different types of securities including repurchase agreements, commercial paper, and short-term bonds among other money funds. The secret is to have the money market fund of the highest quality and highest liquidity.
About Bruce Bent
Bruce Bent II is the President and Vice Chairman of Double Rock Corporation. This is a leading financial technology company that provides the industry with the most inventive cash management and cash related solutions to the broker-dealer, qualified plan, banker, and retail markets.His expertise in the financial world dates back to his father who was the founder of the first money market fund. Bemt II is the senior executive to each of the Rocks owned subsidiary companies and affiliates that include the access control advantage Inc. Island Properties LLC, Intrasweep LLC, and Landing Rock group as well as Capital LLC.
Mr. Bent is a pioneer in the cash management and retirement service business. His vision and drive have been the catalyst of most famous and influential products in the market. He has been a significant influence in the financial and technological industries.
For more information on Bruce Bent II follow him on Twitter.