Monetary fund is an open-end fund that collects idle social funds, is operated by fund managers and kept by fund custodians. It specializes in investing in low-risk money market instruments, which is different from other types of open-end funds. It has the characteristics of high security, high liquidity, stable income and "quasi-savings".
From the early 1970s to the 1980s, the United States was in a "stagflation" environment of economic recession and high inflation. At that time, the Federal Reserve controlled the interest rate of bank deposits, the interest rate of residents' deposits was lower than the inflation rate, and deposits were always in a state of depreciation. In order to attract funds, banks have introduced certificates of deposit with interest rates higher than the inflation rate. However, the initial deposit amount of this time deposit certificate is relatively large, and the minimum investment unit is often one hundred thousand or one million dollars. Only a few institutional investors have enough cash to make such investments.
For most Americans, the only financial investments they could participate in at that time were bank savings accounts, stocks and bonds with pitifully low interest rates.
When times are hard, people will naturally look for assets with good security and strong liquidity. However, many financial assets are either too risky, illiquid or have low returns, which cannot meet the financial needs of investors.
At that time, Ruth Bant, director of the cash management department and credit analyst of the world's largest pension fund teacher annuity insurance company, had a genius idea after a thorough investigation of the financial services industry: he founded a * * * mutual fund called "savings fund company" at 197 1.
Product features:
1. Principal security: Most money market funds have the lowest risk among all kinds of funds. Money fund contracts generally do not guarantee the security of the principal, but in fact, due to the nature of the fund, the loss of the principal of the money fund rarely occurs in reality. Generally speaking, money funds are regarded as cash equivalents.
2. 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.
3. Higher yield: Most money market funds generally have the income level of national debt 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.
4. 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.
5. Dividend exemption: Most money market funds always maintain the face value of 1 yuan. 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.