Why money market funds are safer short-term bets
Jun 27, 07:06

Money market funds (MMF) are debt mutual funds investing in short-term debt securities maturing within one year. These funds invest in the money market instruments such as T-Bill, certificate of deposits and commercial papers and which are issued by government, banks and institutions respectively. Since these instruments are highly rated, credit risk is relatively low in these funds. These securities are short maturity papers hence they are less sensitive to interest rate risk. MMF further minimise the rate risk by following the accrual strategy of holding the securities till maturity. MMF can be better options for parking your excess funds for short periods compared to your savings bank account.

Money market funds