Monetary fund is an open-end fund that collects idle social funds, is operated by fund managers and kept by fund custodians. Special investment in low-risk money market instruments is different from other types of open-end funds and has the characteristics of high security, high liquidity, stable income and quasi-savings.
Product characteristics
Security of principal: Most money market funds have the lowest risk among all kinds of funds, and money fund contracts generally do not guarantee the security of principal, but in fact, due to the nature of funds, money funds rarely lose principal in reality. Generally speaking, money funds are regarded as cash equivalents.
Strong liquidity: liquidity can be comparable to demand deposits. The fund is easy to buy and sell, with short time to receive funds and high liquidity. Generally, the funds will arrive in a day or two after redemption. At present, some fund companies have opened the instant redemption business of money funds, which can be received on the same day.
Higher yield: most money market funds generally have the level of income from treasury bonds investment. Money market funds can not only invest in investment tools that ordinary institutions can invest in, such as exchange repurchase, but also enter the inter-bank bond and repurchase market and the central bank bill market for investment. Its annual net rate of return can generally be compared with the one-year time deposit interest rate, which is higher than the income level of bank deposits in the same period.
Moreover, money market funds can avoid hidden losses. When there is inflation, the real interest rate may be very low or even negative. Money market funds can keep abreast of interest rate changes and inflation trends and obtain stable and high returns.
Low investment cost: generally speaking, there is no handling fee for buying and selling money market funds, and the subscription fee, subscription fee and redemption fee are all zero, so it is very convenient for funds to enter and exit, which not only reduces the investment cost, but also ensures liquidity. For the first subscription/subscription, 1000 yuan, and for the second subscription, 100 yuan will be increased.
Dividends are tax-free: most money market funds always have a face value of 1 yuan, and the income is calculated every day, and there is interest income every day. Investors enjoy compound interest, while bank deposits are only simple interest. Monthly dividends are carried forward as fund shares, and dividends are exempt from income tax.