Best Money Market Mutual Funds

Best Money Market Mutual Funds. If you’re looking for a safe short-term investment for your cash, money market funds may be perfect said Financial Treat

Best Money Market Mutual Funds
Best Money Market Mutual Funds

You may have read about FDIC-insured money market accounts that can be opened with a bank or credit union. Money market funds are another beast. They are investments, not bank accounts – it is important to understand that they are not FDIC insured.

Still, money market mutual funds do more than present themselves as a safe place to earn returns on short-term invested money.

The Vanguard Treasury Money Market Fund is one of the most conservative investment options offered by Vanguard. The fund invests primarily in U.S. government bonds. At least 80% of its holdings are debt securities issued directly by the government in the form of Treasury bills, and may also invest in other securities, including but not limited to government debt securities or repurchase agreements backed by U.S. Treasury securities or cash.

The Federal Hermes Prime Cash Obligation Fund is designed to provide liquidity and capital stability to its holders. The fund invests primarily in a portfolio of high-quality dollar-denominated fixed income securities issued by banks, corporations and the U.S. government.

The Invesco Premier Portfolio Fund is designed to preserve capital and liquidity for its investors while delivering competitive returns. The fund invests primarily in short-term securities and commercial paper issued by companies with good credit ratings, banks and financial institutions, and debt securities issued by the U.S. government.

Compared to other funds we list, the Vanguard Federal Money Market Fund is a relatively accessible money market option with a minimum investment of just $3,000. The fund invests at least 99.5% of its total assets in cash, U.S. Treasuries, or repurchase agreements backed only by U.S. Treasuries or cash.

Fidelity Investments’ money market portfolio is designed to invest more than 25% of its total assets in assets issued by companies operating in the financial services industry. The fund also invests in U.S. dollar-denominated commercial paper, U.S. government bonds and repurchase agreements from domestic and foreign issuers. A reverse repurchase agreement may be entered into in relation to the Fund.

Fidelity money market funds have the lowest minimum investment of any of our listed funds, making them a very accessible option for the average investor. The fund holds more than 25% of total assets in instruments issued by companies in the financial services industry. The fund also invests in U.S. dollar-denominated commercial paper, U.S. government bonds and repurchase agreements from domestic and foreign issuers. A reverse repurchase agreement may be entered into in relation to the Fund.

Why We Chose His Pimco Government Money Market Fund invests in a portfolio of at least 80% U.S. government bonds and U.S. dollar-denominated money market instruments. These include U.S. Treasury bills, notes and other debt guaranteed by the U.S. government, as well as repurchase agreements backed by U.S. government debt.

The Pimco Government Money Market Fund invests in a portfolio of at least 80% U.S. government bonds and U.S. dollar-denominated money market instruments. These include U.S. Treasury bills, notes and other debt guaranteed by the U.S. government, as well as repurchase agreements backed by U.S. government debt.

Portfolio Composition

The best money market funds offer a combination of positive returns, low risk, and low expense ratios. To make our selection, we combed through the list of money market funds on MutualFunds.com and identified nine funds with the highest returns, lowest costs, and minimum investment balances of $1,000,000 or less.

Note that the 7-day yield is the industry standard for directly comparing money market funds. It takes fund allocations plus upside minus average fees over a 7-day period and assumes that average lasts a full year.

When choosing a money market fund, make sure you meet the minimum investment requirements. Also, it is important to understand the investments each fund holds. Study your options carefully before making a decision.

Remember, when it comes to investing, past performance is no guarantee of future results.

A money market mutual fund — often referred to as a money market mutual fund — is a low-risk investment vehicle that provides both modest returns on capital and a high level of liquidity. This means you can easily and quickly transfer funds in and out of money market funds without any fees or penalties.

Money market funds were first developed in the 1970s when bank money market accounts emerged as a low-yielding alternative to savings accounts. As the name suggests, a money market fund is a mutual fund that invests shareholders’ money in short-term, high-quality debt securities. This makes money market funds far less risky than mutual funds that buy stocks or even long-term bonds.

Money market funds can be divided into three categories: premium funds, government funds and tax-exempt funds.

When comparing the top money market funds on our list, we noticed some patterns.

First, in terms of expense ratios, many of the funds with the highest fees also require very high minimum deposits. The only exception: Fidelity Money Market Funds (SPRXX), the only fund on this list that doesn’t have a minimum deposit.

The reality of the current low interest rate environment is that money market fund returns are minimal. As for the funds on our list, very few offered seven-day returns well above zero — only one returned less than 0.10%.

Only one money market fund outperformed in terms of cost, yield and minimum investment: the Invesco Premier Portfolio Fund (IMRXX). If you can reach a minimum investment size of $1,000, IMRXX will offer relatively high returns and low costs.

Money market funds are very useful tools for holding the cash portion of a portfolio. The decisive advantage of money market funds is that they are highly liquid investments.

Take real estate investing, for example. Real estate can offer great returns in the long run, but it’s an extremely illiquid investment because it takes at least a few months to sell a property and raise cash. Savings accounts, on the other hand, are highly liquid—you can go to an ATM and withdraw cash.

Money market funds provide greater liquidity than certificates of deposit (CDs) and treasuries while offering minimal risk. Unlike CDs, which typically must be held to maturity to cash out with impunity, money market funds have no maturity date and can be liquidated on demand. You can easily sell Treasuries on the secondary market, but it is also possible to lose money on the sale.

If that sounds like a high-yield savings account or an overnight savings account, it is. The main difference is that money market fund returns respond much more quickly to changes in market interest rates. When interest rates rise, the APY of most money market and savings accounts significantly lag the market, and money market fund returns respond immediately.

This can make money market funds an excellent choice for getting a return on your money. This is especially true when you know you’re about to make a big purchase and need quick access to cash.

For example, let’s say you’ve put down a down payment on your first home and are looking for the perfect property. Investing that money in stock investing is too risky because you plan to buy a home soon, and market volatility could eat into some of your investment. But the balance is large enough that you don’t want to miss out on the opportunity to earn interest by depositing it into your checking account. In this case, money market funds will provide you with the liquidity and stability you need, with the potential for modest returns.

Interest rates and yields continue to fall as the Covid-19 pandemic continues. Interest rates on everything from CDs to money market funds have fallen to near zero. Today, some money market funds return 0.00%, while the top return funds do not return more than around 0.10%. Low yields present challenges for investors looking to generate income from cash.

Online savings accounts and money market accounts pay the highest rates for those with balances below the FDIC insurance limit. Money market funds are a relatively safe option for those with cash balances well above the FDIC limit. While yields are historically low, money market funds should react quickly when they rebound.

By joybe