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Exploring Money Market Funds | A Wise Investment Choice



Exploring Money Market Funds | A Wise Investment Choice

Exploring Money Market Funds | A Wise Investment Choice.Money market funds are a type of debt mutual fund that invests in highly liquid money market instruments.

Exploring Money Market Funds | A Wise Investment Choice

These funds aim to deliver returns that typically surpass those of term deposits. They are particularly attractive to investors seeking fixed returns within a short timeframe, typically ranging from three months to one year. Notably, these funds do not incur losses for investors who stay invested for longer than six months, making them a compelling choice for those seeking higher returns than traditional term deposits.

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Popular Money Market Funds

As of July 31, there are 23 money market funds with a combined total assets under management (AUMs) of ₹1,49,582 crore. Some of the popular money market funds in this category include

Fund Name AUM (₹crore)
SBI Savings Fund ₹23,142.44 crore
Tata Money Market Fund ₹12,977.56 crore
Kotak Money Market Fund ₹17,680.13 crore
ICICI Prudential Money Market Fund ₹17,119.95 crore
HDFC Money Market Fund ₹19,322.52 crore
ABSL Money Manager Fund ₹15,665.99 crore
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Understanding Money Market Instruments

Money market instruments are the key assets in which money market funds invest. These instruments are traded in the money market, a marketplace for cash and cash equivalents. Some common money market instruments include:

  1. Certificates of Deposit: These are similar to term deposits but lack the option of early redemption. They can be negotiated directly between parties.
  2. Treasury Bills: Issued by the government to raise funds for up to one year, these bills come with a sovereign guarantee, making them a safe investment choice with lower returns.
  3. Commercial Paper: Short-term unsecured promissory notes issued by organizations with high credit ratings. They are issued at a discount and redeemed at face value.
  4. Repurchase Agreements: These agreements involve temporary lending of securities between Reserve Banks and commercial banks or between two banks. The borrower buys back the securities at a predetermined price.
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Investing in Money Market Funds

A Wise Decision Money market funds offer an attractive investment option for those seeking fixed returns over a short period. With a variety of popular funds available and a range of money market instruments in which they invest, investors have the opportunity to earn better returns than traditional term deposits. Consider exploring these funds for a potentially rewarding investment experience.

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