A money market fund is simply an investment in debt securities with higher yielding fixed interest, short-term maturity, minimal risks, and at the same time maintains its net asset value of $1 per share. As money market funds are critical providers of much-needed market liquidity to financial intercessors, it is regulated under the Investment Company Act of 1960 in the United States. An investor can buy shares of money market funds through mutual fund brokerage and banks.
The money market funds come in three categories namely government, prime and municipal based fund investments as defined by the U.S. Securities and Exchange Commission (SEC). In accordance with SEC regulations, prime and municipal funds are further categorized as either retail or institutional founded on investors in the fund.
The Government Money Fund invests a maximum of 99.5% of its assets in cash and government securities or repurchase agreements with collateral securities. Similarly, the Treasury fund is government money fund that invests in U.S. Treasury Bills, Bonds, and Notes. In contrast, the Prime Fund invests broadly in fluctuating rated debt or unsecured promissory notes of companies and securities of the U.S. government and agencies. Institutional money funds are sold to companies, governments, or fiduciaries because they are high or low investments with low expense share classes. Municipal Fund based invests are obligations of state and local authorities normally exempted from federal and state income taxes. Retail money funds constitute 33% of the entire money market fund assets are offered to individual investors.
In 1971, the first money-market fund called the Reserve Fund was invented. Due to its importance and effect of this financial product on the United States financial history, it was recognized by the American Museum of Financial History, a branch of the Smithsonian Institution. Even though there existed indiscriminate buying and selling in the money market before the Reserve Fund was in place. As a result, the money market fund currently is worth over US$3 trillion benefiting many investors.
Bent II has a lot of knowledge and understanding of financial aspects including money market funds. In fact his father was the founder of the first money market fund. Bruce Bent II has gone on to be a remarkable force in the financial world. He graduated from Northeastern University with a Bachelor’s degree. From there he went on to help business with creative retirement stratedgies and financial solutions. Growing up in his father’s shadow has helped him carve out his own path to success. Currently Bent II is the Vice Chairman and President of Double Rock Corporation.
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