A dollar back for every dollar invested, plus a reasonable rate of return that was the concept behind the money market fund. The people who went to a money market fund were those who wanted something safe to put their money into, like a bank, but with a better rate of return than simply having a savings account. Investors were looking for strong liquidity and stability are the main users of money market funds.
The way a Money Market Fund works is the fund buys up highly rated debt, such as government securities, and seeks to maintain a stable value of $1 per share. That is the main difference from other financial instruments. The portfolio needs to have a weighted average maturity of 60 days or less, and not invest more than 5 percent in anything but government securities and repurchase agreements. As a result, they are highly liquid and a very secure source of investment as they cannot suffer as badly from the risks of investing in private companies.
Bruce Bent II is a financial guru who understands money market funds. He grew up in the financial world and later went on to have is own career has a great thinker, investor and financial expert. Bent II went to Northeastern University and graduated with his Bachelor’s in Philosophy. Now he is the vice chairman and president of Double Rock Corporation where he helps businesses like banks find creative and innovating cash-related solutions.
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