With the continuous improvement of people's financial knowledge, more and more people begin to pay attention to the benefits and risks of financial tools. As one of the main financial products, money fund has attracted much attention. So, what exactly is a money fund? The following analysis of monetary funds from multiple angles.

I. Definition

Money fund is a kind of fund product with low risk and low income. It invests in high liquidity, short-term bonds and money market instruments to obtain relatively stable income. Its main features are stability and security. Monetary funds usually adopt the redemption method of T+ 1, that is, the time for investors to apply for redemption on the day they buy the fund is one working day.

Second, risk.

Even if the money fund is a stable fund, there are certain risks, mainly including two aspects: market risk and credit risk.

1. Market risk

Market risk refers to the adverse effects brought by market changes. Although money funds invest in short-term bonds and money market instruments, they are still influenced by the market. For example, if the money market tightens, the yield of the money fund may decrease.

2. Credit risk

Credit risk refers to the default of the bond issuer or the government, which leads to the loss of the investor's principal. Although most money funds invest in AAA-rated government bonds and corporate bonds, this cannot completely rule out the existence of credit risk.

Third, income.

The income of the money fund mainly comes from coupon income and spread income. The coupon income refers to the income obtained by the fund from holding coupon interest such as bonds, and the spread income refers to the income obtained by the fund from the difference between buying and selling bonds and other securities. Compared with other fund products, the money fund has lower income, but it is relatively safe and has strong liquidity, which is suitable for value preservation and short-term financial management.

Fourth, it is suitable for people.

Monetary fund is suitable for people with low risk tolerance, such as the elderly, students and housewives. In addition, enterprises and institutions with high demand for cash management and portfolio protection are also suitable to choose money funds as liquidity reserve tools.

To sum up, money fund is a low-risk, low-yield wealth management product, suitable for people with low risk tolerance. Although the money fund is relatively safe, there are still market risks and credit risks, which need to be carefully selected.