The money fund only invests in short-term monetary instruments in the money market, such as short-term treasury bonds, bank time deposit certificates, short-term treasury bonds, central bank bills, interbank deposits and other short-term securities, and the term is generally within one year, so there is basically no risk. The net value of the money fund remains unchanged at 1 yuan, and the change of its income is reflected by the change of the fund share. Investors can get their own funds back by redeeming the fund share. The only way for the money fund to pay dividends is to "transfer dividends to investment", so every month, the fund company will carry forward the accumulated income to the money fund share and directly distribute it to the investor's fund account.
Advantages of the Monetary Fund:
1, the income is stable. Monetary funds pool idle social funds and invest in short-term securities with high security and stable income, such as short-term treasury bonds, bank time deposit certificates, short-term treasury bonds, central bank bills and interbank deposits. Therefore, the money fund's investment income is stable and has the characteristics of "quasi-saving". Usually, the income is higher than the interest of bank time deposits and has the income level of national debt investment, but the money fund does not guarantee the safety of investors' principal.
2. High liquidity. The redemption time of money funds is generally T+ 1 or T+2 working days, which is highly liquid. Now some fund companies have even launched the T+0 trading model of money funds. Investors apply for redemption on the same day, and the funds arrive on the same day, which greatly strengthens the liquidity of funds, second only to bank demand savings. At present, some money funds also support issuing checks and paying consumer bills with fund accounts, and even allow investors to withdraw funds directly from ATMs. The money fund is very suitable for investors who require high liquidity of investment products, or as a place for investors to temporarily store cash before making their next investment.
3. Low risk. The issuers of money funds and the participants in the money market are generally financial institutions or government departments with extremely high credit ratings, so the credit risk and commercial risk are low.
4. The investment cost is low. Money fund transactions are generally free of handling fees, subscription fees, subscription fees and redemption fees, and the investment cost is low.