What Features Do Money Market Funds Have Compared To Traditional Funds

Money market funds have the following characteristics when compared to traditional funds. 
1, The main difference between money market funds and other funds that invest in equities is that the net asset value of the fund units is fixed, usually at $1 per unit.
2, The performance of money market funds is measured by their yield, which is different from other funds that profit from the appreciation in net asset value.

3, Good liquidity and high capital security. These characteristics mainly stem from the fact that the money market is a low-risk, highly liquid market. At the same time, investors can transfer units at any time as required, regardless of the maturity date.
4, Low risk profile. The maturity of money market instruments is usually very short and the average maturity of a money market fund portfolio is usually 4 to 6 months, so the risk is low and its price is usually only affected by market interest rates.
5, Low investment costs. Money market funds usually do not charge redemption fees, and their management fees are also low. The annual management fee of money market funds is about 0.25% to 1% of the net asset value of the fund, which is lower than the traditional fund annual management fee rate of 1% to 2.5%.
6, Money market funds are all open-ended funds. Money market funds are usually regarded as risk-free or low-risk investment vehicles, suitable for short-term investment of capital to generate interest for contingency purposes, especially when interest rates are high, inflation is high, the liquidity of securities is reduced and credibility is diminished, so that the principal can be protected from loss.

A money market fund is a fund that invests in short-term marketable securities in the money market. The fund's assets are mainly invested in short-term monetary instruments such as treasury bills, commercial papers, bank term deposits, short-term government bonds, corporate bonds and other short-term marketable securities. Many of these money funds have performed well, with yields exceeding the one-year benchmark fixed deposit. The proportion of individual investors in the investment structure of such funds is also gradually increasing. Money market funds were first created in the United States in 1972. By the end of 1986, there were over 400 money market funds in the US with total assets of over US$290 billion.