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2023's top money market mutual funds


If you want to store your money in a safe, short-term, and liquid investment, a money market fund is a great choice. These mutual funds are made to have very little risk, high liquidity, and cheap cost. 

Money market accounts (MMAs), which banks and credit unions offer and pay interest on based on current interest rates, should not be confused with money market mutual funds. Money market funds, unlike bank accounts, are investment securities. 

For short-term investing, money market mutual funds are extremely safe investment vehicles that can generate a tiny return on your money. Here are a few of the top money market funds on the market right now.


Our ranking of the top money market funds is based on several important variables. These funds have modest investment minimums, making them accessible to all investors; other significant considerations are reasonable yields, low risk, and reasonable expense ratios. Our criteria disqualified investments that impose redemption restrictions or levy liquidity fees.

We found eight funds with minimum investment requirements of $10,000 or less, seven-day yields of 3.7% or more, and reasonable cost ratios of under 0.5%.

The seven-day yield is the industry standard for comparing money market funds when researching them. It takes into account fund dividends + appreciation, less the daily average of costs, and then extrapolates this average over the subsequent twelve months.

Most of the funds that met our screening criteria for seven-day yields had high investment minimums or were only available to institutional investors. Additionally, several of these funds imposed redemption restrictions and levied liquidity fees.

The Federal Deposit Insurance Corporation (FDIC) does not guarantee money market funds, although they invest significantly in cash and government securities and are thought of as extremely low-risk investments.

Money Market Mutual Fund: What Is It?

Money market mutual funds are fixed-income mutual funds that invest in short-term and very low-credit-risk debt instruments. They can invest in taxable or tax-exempt government securities and have extremely low volatility and strong liquidity.

Since money market funds are open-ended, clients may purchase an unlimited number of shares from them. At a price equal to the daily determined net asset value (NAV), the fund sells and redeems the shares.

Money market fund managers use unique pricing and valuation methods to maintain their NAV fixed at $1 per share. Depending on the current market value of the securities in their portfolios, some allow their NAV to fluctuate.


Money Market Fund Types

Money market mutual funds can be classified as government, prime, or municipal funds depending on the sort of investments they make.

Prime and municipal funds can also be categorized as institutional or retail, depending on the fund's investors. Government funds are particularly safe because they are required to invest 95.5% of their assets in government-issued securities.

Municipal bonds, which pay interest that is not subject to federal income tax, are purchased by municipal money market funds from municipalities and municipal agencies.

Investments in corporate commercial paper, repurchase agreements, certificates of deposit, and other bank debt securities are made by prime money market funds.

Which is preferable, a savings account or a money market fund?

The most secure and liquid way to save cash is in a savings account with a financial institution. This is because savings account deposits are up to $250,000 FDIC insured, and money is always available at the counter or ATM.

Given that they invest in cash and assets backed by the US government, such as Treasury bills, Treasury notes, and repurchase agreements based on government-supported liabilities, money market funds are likewise relatively low risk.

Although some funds charge redemption fees for liquidity and have restrictions on redemption periods, both accounts have very high liquidity.

The current state of money market funds

In the prolonged low-rate environment that existed over the past few years, money market funds offered insignificant yields. Seven-day yield figures have been revitalized as interest rates have increased.

Nevertheless, inflation is increasing much more quickly. The Consumer Price Index (CPI) of the Bureau of Labor Statistics indicates that inflation reached an all-time high of 8.6% in May 2022. Inflation reduces actual returns on all investments, not just money market funds, even though money market funds pay out more.

It's crucial to pay attention to how your investment results are impacted in an inflationary economy. If you need to store money for a relatively short period, a money market fund is a fantastic choice. However, if you're keeping money for a big purchase like a house, you need to be mindful of the effects of inflation. Always remember to talk about your plans with a financial counselor.

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