What is a Money Market Mutual Fund?

Money Market Mutual Funds are different than Veridian's Money Market accounts. A money market fund is a type of mutual fund that is required by law to invest in low-risk securities. These funds have relatively low risks compared to other mutual funds and pay dividends that generally reflect short-term interest rates.

Money market funds typically invest in government securities, certificates of deposit, commercial paper of companies, or other highly liquid and low-risk securities. They attempt to keep their net asset value (NAV) at a constant $1.00 per share - only the yield goes up and down. But a money market's per share NAV may fall below $1.00 if the investments perform poorly. While investor losses in money markets have been rare, they are possible. Unlike a "money market deposit account" at a bank/credit union, money market funds have traditionally not been federally insured.