Best money market funds in June 2024

A money market fund is a type of mutual fund that invests in highly liquid, short-term debt securities, such as U.S. government securities, and/or repurchase agreements that are collateralized solely by U.S. government securities or cash (collectively, government securities).

Best money market funds in June 2024
Photo by Carlos Muza / Unsplash

Top 9 based on 7 day SEC yield %:

7-Day Yield Ticker Fund Name Portfolio Net Assets ($B) Average Maturity Minimum Investment Net Expense Ratio Redemption Gate Liquidity Fee
5.29% VUSXX Vanguard Treasury Money Market Fund → 73.7 28 Days 3000 0.09 No None
5.29% VMRXX Vanguard Cash Reserves Federal Money Market Fund → 117.6 11 Days 3000 0.1 No None
5.28% VMFXX Vanguard Federal Money Market Fund → 296.9 10 Days 3000 0.11 No None
5.25% FRGXX Fidelity Government Portfolio → 196.533 34 Days 10000 0.14 No None
5.15% SWVXX Schwab Value Advantage Money Fund → 192.506 28 Days 0 0.34 No None
4.99% FDRXX Fidelity Government Cash Reserves → 218.183 34 Days 0 0.27 No None
4.97% SPAXX Fidelity Government Money Market Fund → 326.872 33 Days 0 0.42 No None
4.92% MJGXX JPMorgan U.S. Government Money Market Fund → 256.82 45 Days 1000 0.59 No None
4.9% DGQXX Dreyfus Government Cash Management → 115.932 43 Days 2500 0.44 No None

What is a money market fund?

A money market fund is a type of mutual fund that invests in highly liquid, short-term debt securities, such as U.S. government securities, and/or repurchase agreements that are collateralized solely by U.S. government securities or cash (collectively, government securities). Money market funds are designed to provide investors with a safe and liquid investment option that generates income.

Benefits of investing in money market funds

There are several benefits to investing in money market funds, including:

  • Safety: Money market funds are considered to be a safe investment, as they invest in short-term debt securities that are typically backed by the government.
  • Liquidity: Money market funds are very liquid, meaning that investors can quickly convert these assets to cash.
  • Income: Money market funds typically generate higher income than savings accounts or certificates of deposit.
  • Tax efficiency: Some money market funds have the added benefit of providing returns that are tax-exempt for qualified investors.

Risks of investing in money market funds

These funds are designed for investors with a low tolerance for risk; however, the fund’s performance could be hurt by:

  • Income risk: The chance that the fund’s income will decline because of falling interest rates. Because the fund’s income is based on short-term interest rates—which can fluctuate significantly over short periods—income risk is expected to be high.
  • Manager risk: The chance that poor security selection will cause the fund to underperform relevant benchmarks or other funds with a similar investment objective.
  • Credit risk: The chance that the issuer of a security will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that security to decline. Credit risk should be very low for the fund because it invests primarily in securities that are considered to be of high quality.

How to invest in money market funds

You can invest in money market funds through a brokerage account or directly from a Bank or financial corporations. To invest through a brokerage account, you will need to open an account with a broker and deposit money into the account. Once you have deposited money into your account, you can then purchase money market funds.

When to invest in money market funds

Money market funds are a good investment for investors who are looking for a safe and liquid investment option that generates income. Money market funds are a good choice for investors who are saving for a short-term goal, such as a down payment on a house or a new car. Money market funds are also a good choice for investors who are retired and need a safe and liquid investment option to generate income.

Money Market Funds vs. Money Market Accounts

Feature Money Market Fund Money Market Account
Insured No Yes
Safety Considered to be safe FDIC insured
Liquidity Very liquid Very liquid
Income Typically higher than savings accounts Typically higher than savings accounts
Fees May have management and liquidity fees May have monthly maintenance fees
Minimum balance May have a minimum investment amount May have a minimum balance requirement
Number of withdrawals May have redemption gates May have a limit on the number of withdrawals per month

Which type of account is right for you?

The best type of account for you will depend on your individual needs and circumstances. If you are looking for a safe and liquid place to store your money, either a money market fund or a money market account may be a good option. If you are looking for an FDIC insured account, then a money market account is the best option. If you are looking for an account with higher interest rates, then a money market fund may be a better option.

Conclusion

Money market funds are a safe and liquid investment option that generates income. Money market funds are a good choice for investors who are saving for a short-term goal or who are retired and need a safe and liquid investment option to generate income.

Disclosure: INVESTMENT AND INSURANCE PRODUCTS ARE: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE