Problem description:
The Monetary Fund pays dividends every month, which is calculated every day. If you buy it for less than a month and redeem it, will you lose money after deducting the management fee? In extreme cases, what happens when you buy it the same day and redeem it the next day?
Analysis:
There may be losses, but the losses may be quite low and can be ignored only in extreme cases.
Money funds invest in money market instruments within one year, such as government bonds, financial bonds, corporate bonds, etc., with high security and good liquidity. They have income every day, which consists of interest and bill price difference, and generally have positive income every day. Even a small negative income can be eliminated by accounting treatment. In extreme cases, the market interest rate rose sharply and unexpectedly, and the fund had to sell bonds at a low price because of a large number of redemptions on the same day. In this case, there will be a real loss. The probability of this happening is extremely low and can be ignored.
The income announced by the Monetary Fund every day is deducted from all related expenses, such as management fees and custody fees, so don't worry about the cost.
At present, the income of the Monetary Fund in 2008 is around 2%.