What are Money Market Funds?

Money market funds (MMF) refer to an investment fund that invests in short-term (within one year, an average term of 120 days) securities in the money market. The fund's assets are mainly invested in short-term currency instruments such as Treasury bills, commercial paper, bank time deposit certificates, bank acceptance bills, government short-term bonds, and corporate bonds. Monetary funds have only one way to pay dividendsdividends to investment. Each unit of the money market fund is always maintained at 1 yuan, and the income after exceeding 1 yuan will be automatically converted into fund shares on time. How many fund shares are owned by how many assets. While other open-end funds have a fixed share and a cumulative unit net value, investors can only rely on the annual dividends of the fund to achieve returns.

Money market fund

Money market funds have the characteristics of stable income, strong liquidity, low purchase limits, and high capital security.

1. The main difference between money market funds and other funds investing in stocks is that

As the name implies, money market funds are

The money market mutual fund is first of all a fund. At the same time, it is a fund that specializes in investing in money market instruments. Compared with general funds, in addition to the characteristics of general fund expert financial management and decentralized investment, money market mutual funds It also has the following investment characteristics:

1. Money market common

U.S. money market mutual fund as

In the current financial crisis, liquidity has become a big issue. Even financial instruments, such as certificates of deposit issued by creditworthy banks (which are generally fully liquid), have become difficult to trade-in fact, the market is sometimes even closed. In the United States, the Federal Reserve has announced that Section 2a-7 (Treasury-style) money market funds provide liquidity to reach cash outflows, especially if these cash amounts are unusually large. The Bank of England is also committed to providing similar facilities and the European Central Bank may do the same. Further plans to support funding are to establish a deposit insurance plan for similar retail investors to bank deposits.

As a defensive move, in late September 2008, most funds increased their overnight liquidity (in sterling funds, the range is probably between 20 billion and 30 billion pounds, or 30 billion to 450 billion Billion US dollars), which further disrupted the interbank market and exacerbated the gap between the overnight interest rate and the London Interbank Offered Rate. However, this approach comes at the cost of fund performance, especially for those liquid securities funds that have a relatively high proportion of illiquid liquids, such as floating-rate bonds and commercial paper, and their management managers will therefore believe that the When the overnight call rate collapsed, the funds they managed had to account for a larger proportion of the overnight investment.

So far, the sterling money market fund and the euro money market fund seem to have withstood the storm, but the performance gap between different funds in the later period has been far greater than the usual gap, because various funds have their own benchmarks. This is an area worth exploring because it can tell you a lot about how to manage the fund and what problems have arisen. It will be interesting to understand how the fund weathered the downturn in global interest rates. Generally, the fund is in the most competitive state when interest rates fall.

Obviously, both US and European regulators will be examined whether and how money market funds should be specifically managed. However, while paying attention to this aspect, it is expected that the funds will be managed and managed more carefully.