Money Market Funds

POSTED BY rajan.panchal24 ON May 23, 2012 5:24 pm COMMENTS (3)

I have come accross a term called Money Market Funds at one of the investment site .
Can anyone put light into these kinds of funds on followoing points?

1. What are these funds?
2. Are they safe?
3. How one can invest in these funds?Is there any specific amount range that can be invested in such instruments?
4. Who should go for these funds?

Your views will be much appreciated.

3 replies on this article “Money Market Funds”

  1. Renu Chauhan says:

    One more link to help you under stand Money Markets


  2. Renu Chauhan says:

    Dear Rajan,

    In the world of finance, ‘liquid’ means anything that is almost as good as cash. Money market funds or Liquid funds as they are commonly known as are one of the safest places to park your money for short periods of time. The funds invest into money market securities and debt securities that mature in 91 days.

    Most corporates park their short term money into these funds. Liquid funds are also suited for investors earning more than Rs 5 lacs, as returns from liquid funds are more tax efficient than the interest one can get from the savings accounts.

    Some of the benefits of parking money into liquid funds are

    a) Zero exit loads

    b) Investments are very safe

    c) Money can be redeemed in 1 day

    d) Lowest expense ratio of all the mutual funds

    e) One can invest with a minimum of Rs 5,000

    f) Multiple periods of dividend reinvestment options – daily, weekly, fortnightly, monthly

    Would also like to share an article ” ” which will help you understand the debt mutual funds better 🙂


  3. Dear Rajan,panchal, A money market fund (also known as money market mutual fund) is an open-ended mutual fund that invests in short-term debt securities such as Treasury bills and commercial paper. Money market funds are widely (though not necessarily accurately) regarded as being as safe as bank deposits yet providing a higher yield. Money market funds are important providers of liquidity to financial intermediaries. Money market funds seek to limit exposure to losses due to credit, market, and liquidity risks.



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