6.1.2.4. Money Market Funds
Money market funds, which are also discussed in Chapter Two’s section on money market securities, are an additional type of mutual fund. (Money market accounts, in contrast, are a type of bank deposit account and will not be addressed here.) Money market funds invest in high-quality, short-term debt instruments, such as commercial paper, bankers’ acceptances, Treasury bills, and repurchase agreements. They are nearly as safe and liquid as bank accounts, with a higher yield. Money market funds pay dividends based on prevailing short-term interest rates. Money market funds are perfect for investors who require liquidity but would like to earn more interest than if they kept their money in a bank account. Money market funds in the United States are regulated by the Investment Company Act of 1940. Money m