What are money market mutual fund schemes?

1. Money market funds are debt funds that invest in instruments with maturities for a period of up to one year.

2. Treasury bills, certificate of deposits, repos and commercial papers are some of the instruments that money market funds invest in.

3. The idea of these funds is to offer good returns over a period of up to one year while maintaining high levels of liquidity.

4. Being debt funds they carry credit risk, interest rate risk and re-investment risk.

5. These are suitable for investors with an investment horizon of up to a year and low risk tolerance.

(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)

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