The income of the money fund mainly comes from the interest generated by the financial products it invests in. When the market interest rate rises, the interest rate of newly issued short-term bonds or deposits may be higher, while the old bonds held by the money fund are relatively unattractive, which may lead to a decline in the fund's net value. In addition, if the wealth management products held by the money fund default, it will also affect the fund's income.
When investing in money funds, knowing the investment strategy, management fees and historical performance of the funds can help investors make more informed decisions. At the same time, diversification of investment is also an effective way to reduce risks. Don't put all your money in one money fund.
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According to the data of China Asset Management Association, by 2023, the scale of money market funds has accounted for a considerable part of the whole fund market, which shows its popularity among investors.
Although the yield of money fund is not high, it is usually higher than the bank deposit interest rate and has high liquidity, so it is suitable as a cash management tool.
When choosing a money fund, investors should pay attention to the seven-day annualized rate of return and ten thousand-share income of the fund, which can help investors understand the income of the fund.