Category: 

What is a Money Market Mutual Fund?

Article Details
  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 27 November 2016
  • Copyright Protected:
    2003-2016
    Conjecture Corporation
  • Print this Article
Free Widgets for your Site/Blog
Although they mainly functioned as downspouts, gargoyles were also intended to scare people into attending church.  more...

December 3 ,  1989 :  The Cold War officially ended.  more...

Sometimes referred to as an MMMF, the money market mutual fund is an interest-bearing account established through a mutual fund company. Often, an open-ended mutual fund of this type focuses on investing activity that includes the purchase and sale of short-term securities in order to turn a profit for investors. The interest or dividend earned from the account can be withdrawn on a regular basis by the investor or used for further investing activity associated with the fund.

In most cases, participation in a money market mutual fund requires some type of minimum balance to be maintained in the account at all times. Should the account balance fall below that minimum, some funds will allow the investor a short grace period to build up the balance by placing more money into the account. Depending on the structure of the fund, the investor may not be eligible for earning dividends on stock activity until the minimum balance is restored, but that is not necessarily the case.

A money market mutual fund will focus on securities that are likely to yield a return within a relatively short period. To some degree, funds of this type also tend to go with investment opportunities that carry a low chance of risk. Some examples of investment options utilized by a money market mutual fund include commercial papers, government issued Treasury bills, and bankers’ acceptances.

Ad

With many money market funds of this type, the investor has the opportunity to make use of the balance in the account by writing checks that are drawn against the account. Today, it is also possible to electronically transfer a portion of the balance into other financial accounts, such as a checking or savings account. The process of electronic transfers can actually work both ways, allowing an investor to move money into the money market mutual fund in order to increase the balance and earn a greater amount of return from the fund activity.

A money market mutual fund may be made available through an employer. When this is the case, it is possible for participants to contribute to the fund through payroll deduction. When a money market mutual fund program is not available through an employer, it is still possible to work with a broker or a financial manager to identify and become part of a fund of this type.

Ad

You might also Like

Recommended

Discuss this Article

Post your comments

Post Anonymously

Login

username
password
forgot password?

Register

username
password
confirm
email