Money Market Funds

Money Market Fund is a form of debt mutual fund that invests solely in short-term instruments with a maturity of up to 1 year. It includes investments in short-term debt securities, liquid instruments, cash, and cash equivalents.

The money market fund shall invest primarily in money market securities of such kind, and the rest can be in other liquid securities. However, their maturity shall remain within 12 months, which eventually makes them highly liquid.

A money market fund invests primarily in short-term debt instruments like treasury bills, commercial papers, certificates of deposit, and call money. Think of a money market fund as a place where your money is parked for a short time.

The fund uses the pooled money to invest in very short-term instruments. These instruments have maturities of up to 1 year, which helps keep risk and volatility low. The fund manager regularly rolls over these instruments to maintain liquidity and stability. Returns are generated through interest income, not price appreciation.

Unlike other debt funds, money market mutual funds have their own set of advantages to offer, like;

Money market funds may suit those:

• Investors looking to park surplus money for the short term.
• Conservative investors seeking capital stability.
• Businesses or individuals needing quick access to funds.

Planning to invest in a money market mutual fund online? With Anand Rathi, you can invest through a secure, online, and easy-to-use platform. Here's how to get started:

Before investing in a Money market mutual fund, keep these points in mind:

Like other debt funds, Money market mutual funds are taxed based on their date of purchase. For instance:

Bought Before April 1, 2023, but sold after July 23, 2024: LTCG (12.5% - without indexation), STCG (slab rate).

Bought On or after April 1, 2023: Irrespective of holding period - Taxed at the individual's slab rate.