Money Market Funds
Money market funds invest primarily in short-term, high-quality debt and money market instruments. They generally aim to preserve capital, provide liquidity and generate income from their underlying investments, although capital is not guaranteed and their value can fall.
They may invest in instruments such as government securities, Treasury bills, certificates of deposit, commercial paper and short-term corporate debt.
Understanding Money Market Fund Risk
Money market funds are generally exposed to lower levels of market volatility than many longer-term investments, but they are not risk-free. Their value can be affected by changes in interest rates, credit quality, liquidity and market conditions.
Access to an investment may also be subject to the fund’s dealing arrangements and, in exceptional market conditions, may be restricted or delayed.
Key Features of Money Market Funds
Short-Term Investments
Invests primarily in high-quality, short-term debt and money market instruments.
Capital Preservation
Generally seeks to limit volatility and preserve investors’ capital, although the value of an investment can fall and is not guaranteed.
Liquidity
Funds can generally be bought and sold on the fund’s dealing terms, providing access to your investment when you need it.
Income Potential
May provide income from the interest earned on the underlying investments.
Types of Money Market Funds
Government Money Market Funds
Primarily invest in short-term government securities and other eligible government-backed instruments.
Prime Money Market Funds
Invest in a broader range of short-term instruments, which may include high quality corporate debt and bank instruments.
Municipal Money Market Funds
Invest primarily in short-term debt issued by US states, local authorities and other municipal bodies.
