Money Market Funds & Sizes
There are not a lot of places to put money that earn interest, provide immediate availability of funds and are considered safe. Investors seeking flexibility do not want to tie up funds for a long time in certificates of deposit (CDs) or bonds. Money market funds are an alternative to leaving substantial amounts of money in non-interest-bearing checking accounts and often offer a better interest rate than bank savings accounts.
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The Basics of Money Market Funds
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Money market funds are mutual funds that invest in a variety of short-term debt instruments. Some funds specialize in tax-free securities, some invest in Treasury securities, and some money markets invest in corporate debt. Treasury securities include bills, notes and bonds. Funds may also invest in government-backed financial securities. Corporate debt instruments include high-rated, short-term commercial paper.
New SEC Rules
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The Securities and Exchange Commission instituted new rules governing money market funds following the 2008 financial crisis. The SEC requires funds to maintain a weighted average debt maturity level of 60 days or less. The funds must publish a list of their holdings on their website every month. Funds are not insured, but are required by law to invest in low-risk investments. The funds can lose money, but the probability is minimal.
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The Largest Funds
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Crane Data, a financial institution that reviews the money market fund industry, cited JP Morgan Prime money market fund as the largest fund as of Jan. 31, 2011, with $126.69 billion in assets. The second largest fund was Fidelity Institutional Money Market Prime Fund with $60.7 billion in assets. The 20 largest money market funds had a total of $801.088 billion in assets. IMoneyNet, another financial organization following money market funds, records the largest retail money market funds as of March 1, 2011. Fidelity Cash Reserves was the largest with $116.766 billion in assets. Vanguard Prime Money Market Fund was second with $109.253 billion, and Schwab Cash Reserves was the third largest with $32.457 billion. The fourth and fifth largest funds were Fidelity Municipal Money Market Fund with $23.345 billion and Vanguard Tax Exempt Money Market Fund with $18.820 billion in assets.
Researching Funds
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A number of additional financial websites provide information on money market funds. The New York Times publishes a list of the largest money market funds in terms of assets held. The information includes the name of the fund, the seven-day average yield and the type of fund. Other sites with money market fund information are Morningstar and the Wall Street Journal.
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