Money market funds are mutual funds that are required by law to invest in cash-equivalent securities, generally very short-term loans to government or creditworthy corporate borrowers. They often comprise the cash portion of retirement funds. Investors expect to be able to redeem these funds at their full net asset value of $1.00 per share. Because the risk is low, money market dividends are generally limited to current short-term interest rates.
Redeeming Money Market Funds
A money market redemption is the act of converting money market fund shares to cash. The redemption of money market funds from your brokerage account or bank is generally both quick and easy, and it can be done over the internet or by phone. Investors purchase and redeem money market shares at the full net asset value every day. To ensure the flow of money in and out of money market funds, the Securities and Exchange Commission strictly regulates the quality, liquidity, diversification and maturity of investments held by a money market fund.
Video of the Day