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Money Market Mutual Fund

IndianMoney.com Research Team | Updated On Tuesday, September 23,2014, 10:45 AM
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Money Market Mutual Fund

A money market mutual fund is a kind of mutual fund that invests in ultra-safe or low risk securities. The purpose of the fund is to conserve the capital of the fund and it is unusual to see the NAV of a money market mutual fund go below one. The NAV can go below one if the securities do badly but it is quite rare to happen.

A Money Market Mutual fund is meant for people who wish to maintain their capital and park their short-term cash into a safety that gives - stable but low returns. It is also used by citizens who want to balance their portfolio and build in some security. If you have a lot of stocks in your portfolio then money market funds can balance your overall portfolio by providing capital safety.

Money Market Mutual Funds present - securities of domestic and foreign issuers. They are securities that are naturally - high quality (low risk) short term securities that can have a fixed, floating or changeable interest rate.

A money market mutual fund in india usually invests in the following type of assets:

  • Bank certificates of deposits
  • Banker’s Acceptance
  • Bank Time Deposits
  • Commercial Paper
  • Repurchase Agreements

A money market fund is a mutual fund that invests solely in money market instruments. Money market instruments are forms of debt that mature in less than one year and are very liquid. Treasury bills make up the bulk of the money market instruments. Securities in the money market are relatively risk-free.

Money market funds are generally the safest and most secure of mutual fund investments. The goal of a money-market fund is to preserve principal while yielding a modest return. Money-market mutual fund is akin to a high-yield bank account but is not entirely risk free. When investing in a money-market fund, attention should be paid to the interest rate that is being offered.

Types of Money Market Mutual Funds

Money market funds are of two types :

Institutional Money Market Mutual Funds


These funds are held by governments, institutional investors and businesses etc. Huge sum of money is parked in institutional money funds.

Retail Money Market Mutual Funds


Retail money market funds are used for parking money temporarily. The investment portfolio of money market funds comprises of treasury bills, short term debts, tax free bonds etc.

Special Features of Money Market Mutual Funds

  • Money market mutual funds are one of the safest instruments of investment for the retail low income investor. The assets in a money market fund are invested in safe and stable instruments of investment issued by governments, banks and corporations etc.
  • Generally, money market instruments require huge amount of investments and it is beyond the capacity of an ordinary retail investor to invest such large sums. Indian Money market funds allow retail investors the opportunity of investing in money market instrument and benefit from the price advantage.

There are different classes of money market funds based on where they invest their funds. Here is a list of some Money Market Mutual Funds

  • UTI Liquid Short Term Plan (G)
  • Tata Treasury Manager-RIP (G)
  • LIC MF Liquid Fund (G)
  • ING Treasury Mgmt Fund (G)
  • UTI Money Market Fund (G)
  • SBI Magnum Cash-Liq Floater -(G)
  • HDFC Cash Mgmt. Fund - SP (G)
  • ING Treasury Plus - RP (G)
  • Reliance Liquid Fund TP (G)
  • AIG India Liquid Fund-RP (G)
  • Birla Sun Life CM (G)
  • ICICI Pru Liquid Plan (G)
  • Kotak Liquid Regular (G)
  • Sundaram Money Fund (G)
  • IDFC Cash Fund (G)          Not Rated
  • JM Money Manager Fund -RP (G)
  • Templeton (I) Cash Mgmt (G)
  • Bharti AXA Liquid Fund-RP (G)
  • Edelweiss Liquid Fund -RP (G)

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Article Author

IndianMoney.com Research Team

The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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