

Money fund

Money fund Definition

Money funds (or money market funds, money market mutual funds) are mutual funds that invest in short-term debt instruments. They provide the benefit of pooled investments, as investors can participate in a more diverse and high-quality portfolio than they otherwise could individually. And like other mutual funds, each investor who invests in a money fund is considered a shareholder of the investment pool, a part-owner of the fund.

The first money fund - The Reserve Fund - was established in 1972, enabling the small investor to invest in these instruments. Today, more than 1300 money funds are in operation, with total assets of over $1 trillion dollars.

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