"Money market funds are popular with both individual savers and corporations, who often use them as a tool for managing the cash on their balance sheets."
"Their holdings typically have pristine credit quality. All three types of holdings have very short maturities, resulting in little to no interest rate risk."
"Because cash has no potential for capital appreciation, returns on money market funds are driven by yield, which has ranged from a high of 13.4% in 1981 to a low of 0.01% in 2013 and 2014."
Money market funds are mutual funds that invest in short-term debt instruments, including US Treasury bills and commercial paper. They aim to maintain a net asset value of $1.00 per share and provide higher yields than traditional bank savings accounts. These funds are popular among individual savers and corporations for cash management. They offer features like check writing and easy asset transfers. While generally safe and low-risk, money market funds have historically provided lower returns compared to other asset types, with income returns varying significantly over the past decades.
Read at Fast Company
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