Question of the Week: What are money market mutual funds?

We begin our look at different types of mutual funds with money market funds. A money market fund is a mutual fund that invests in cash, cash equivalents, and short-term debt securities that are highly liquid. Some of these securities could include government bonds, treasury bills, and certificates of deposit.

Canadian money market funds attempt to keep the net asset value of the fund at $10 per security. This means any excess earnings, made through interest for example, are distributed to investors in the form of dividends.

Money market funds are considered to be have lower risk and offer investors high liquidity. Because of this, money market funds are seen to be a short-term investment.

The Nova Scotia Securities Commission does not provide investment advice. We are not advising or recommending that investors purchase the mutual funds in our posts. The posts are simply to educate investors so they can be an informed investor when making investment decisions.