Money market funds — which are different than money market deposit accounts — are a type of mutual fund that typically invests in shorter-term, lower-credit-risk debt, such as Treasury bills.
Currently, some money market mutual funds are outperforming assets such as high-yield savings accounts or newly purchased Series I bonds.
Money market funds have less liquidity than savingsChristopher Lyman, a certified financial planner with Allied Financial Advisors in Newtown, Pennsylvania, said he's still proposing money market mutual funds for certain clients, with the caveat of higher risks or more stipulations for accessing the money.
What's more, the U.S. Securities and Exchange Commission recently adopted "liquidity fees" for certain money market funds for withdrawals when daily outflows exceed 5% of the fund's value.
Money market funds aren't risk freeWhile money market funds typically invest in lower-risk assets, experts say it's important to know the funds aren't risk free.
Persons:
dowell, Christopher Lyman, he's, Lyman, Randy Bruns, Bruns
Organizations:
Federal Reserve, Data, Investment Company Institute, Financial Advisors, U.S . Securities, Exchange Commission, Fund, Federal Deposit Insurance Corporation
Locations:
Newtown , Pennsylvania, it's, Naperville , Illinois