Understanding Money Market Funds: Categories & Investment Options

Money market funds can deliver very good returns to investors. Here are a few of the different categories of money market funds and what they have to offer.

U.S. Treasury Funds

One type of money market fund focuses solely on United States Treasury securities. The U.S. Treasury issues several different types of investment instruments that are considered very low risk since they are tied directly to the government.

Government Mix

Another category of money market fund invests in a few different government-backed securities. They will also invest in government-sponsored enterprises (GSEs). This is also considered a very safe type of money market mutual fund because it too invests in the government.

Mixed Fund

One of the most popular types of money market mutual funds is one that diversifies its holdings over quite different investments. These types of funds will invest in T-bills, CDs, commercial paper, and many other types of investments. This is considered one of the safest forms of investment available because of its vast diversification and because of the low-risk investments that are chosen.