Money market funds refer to funds that invest in short-term securities in the money market. The assets of the Fund are mainly invested in short-term monetary instruments, such as treasury bills, commercial paper, bank time deposit certificates, government short-term bonds, corporate bonds and other short-term securities. Since the appearance of the first monetary fund in 2003, the scale of domestic monetary funds has reached 4957.1300 million yuan, among which there are many ones with excellent performance and yield exceeding the one-year benchmark, such as Haifutong Monetary Fund. At the same time, the proportion of individual investors in the investment structure of such funds is gradually increasing. Money market funds can be divided into several categories according to the risk: treasury bonds money market funds, which mainly invest in treasury bonds and government-guaranteed securities. The maturity of these securities is generally less than 1 year, and the average maturity is 120 days.
Diversified money market funds, commonly known as money market funds, usually invest in commercial bills, treasury bills, securities issued by American government agencies, negotiable certificates of deposit, bank acceptance bills and other securities, and the maturity time is similar to the above funds. Tax-free money funds are high-quality municipal securities mainly used for short-term financing, including municipal medium-term bonds and municipal long-term bonds. The advantage of tax-free money funds is that they can reduce or exempt taxes, but the rate of return is usually lower than that of ordinary money market funds (about 30% ~ 40% lower). It is not cost-effective for investors to choose this fund when the tax rate is not high. Compared with traditional funds, money market funds have the following characteristics: the main difference between money market funds and other funds that invest in stocks is that the net asset value of the fund unit is fixed, usually per fund unit 1 yuan. After investors invest in this fund, they can reinvest with the proceeds, and the investment income will accumulate continuously to increase the fund share owned by investors. For example, an investor who invests in a money market fund of 100 yuan can own 100 fund shares. After 1 year, if the return on investment is 8%, the investor will have 8 more fund shares, totaling 108, with a value of 108 yuan.