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Money Market Mutual Funds Comparisons
When you invest in money market mutual funds you are investing just in the money market and you are issued with redeemable units. Although money market mutual funds have a very low risk attached to them, there is still not guarantee that you will get returns. The stability of money market mutual funds depend on the investments made and usually the investments are make in some of the safest market instruments ensuring that losses are rare. |
Money market mutual funds provide high returns provided debt securities issued by banks are purchased. The good news is that money market mutual funds require low initial investments when compared to other mutual funds.
Money market mutual funds are either taxable or tax free. If the fund is taxable then you are liable to pay taxes on the returns. While tax free money market mutual funds are not taxable. The returns from tax free money market mutual funds are low and the investment are done in short-term debt obligations which are issued by federally tax-exempt entities.
There are generally two types of money market mutual funds out of which one is for institutional investors while the other is for retail investors.
Institutional Money Market Mutual Funds
These mutual funds are usually held by institutional investors, business and governments. They sell in large quantities and large amounts of money are put in institutional money funds. The largest money market mutual fund in the U.S. is AIM money market fund.
Retail Money Market Mutual Funds
These mutual funds are usually used for parking money on a temporary basis. The portfolio of retail money market mutual funds consists of commercial papers, short-term debts, tax free funds, government-only funds and non-government mutual funds. In retail money market mutual fund, you can withdraw money in small denomination. This withdrawal can be executed by drawing a check from your bank account.
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