Fully taxable money market funds, not to be confused with money market accounts, are securities that can be purchased through most brokerage accounts or directly from certain financial institutions. These funds can be viewed as mutual funds with holdings consist primarily of short-term debt and cash-on-hand to ensure liquidity. Fully taxable money market funds are funds that generate interest is fully taxable to the American taxpayers, and therefore produce income that is considered akin to online savings and money market accounts and short-term certificates of deposit.
Rates can not match with online savings and CD accounts with a low environmental, as the present, these accounts are more secure for investors, investing more than FDIC-insured limits. Short short-term rate rises, fully taxable money market funds will probably be more competitive with other liquid financial instruments.
Depositors in high tax brackets can find open municipal money market funds to become a more attractive investment with higher tax-equivalent yields, as the interest in these funds are free from Federal taxes, state and local taxes for qualified foreigners.
Best Current Rates for Fully Taxable Money Market Funds* - Updated October 11, 2009
| Fund Name | 7-Day Trailing Yield** (%) | WAM (days) | Assets ($mils) | Min Investment |
| W&R Advisors | 0.67% | 73 | 1239 | $300 |
| USAA MMF | 0.41% | 15 | 5855 | $1,000 |
| Flex Funds Money Market | 0.40% | 54 | 124 | $2,500 |
| Fidelity Select Money Market | 0.33% | 42 | 7134 | $25,000 |
| Vanguard Prime / MMF Investor | 0.21% | 75 | 104404 | $3,000 |
* Note that this table only examines current best rates on fully taxable retail money funds. Institutional funds - they require a minimum deposit of $ 1 million to 10 million U.S. dollars - can exceed the best prices for the best performing retail money market funds. At present rates of institutional funds is not significantly better than the best prices on retail products.
** The 7-day subsequent dividend is another parameter in the corresponding Annual Percentage Yield (Äpy) metric (see Financial Terminology section), as banks are allowed to market savings accounts and CD products. Since 7-day final dividend does not assume the composition of the interest paid during the seven days, then the actual Äpy, assuming rates were to stay constant, normally about 6 to 10 basis points (.06% for, 10 %) higher.
Money market funds are regulated under Article 2a-7 of the Investment Company Act of the 1940th Moreover, fund managers are usually bound by the fund rules to invest in short-term securities (usually less than 180 days) of certain credit rates in order to protect capital and provide shareholder liquidity. On September 19, 2008, issued by the U.S. Department of Treasury a rule, thereby ensuring that the deposits in the US-based 2a-7 money market funds as of that date would not fall below par in a year (that will not "break the buck" ). This rule was quietly allowed to expire without renewal on 18 September 2009. There is no government support or insurance to protect the value of money market funds.
Prices are generally given in the form of a seven-day closing performance, since there is no guarantee of future prices.
Note that these funds may differ substantially from the closed bond funds, which may appreciate or decline in value according to the underlying value of assets and supply and demand for the Fund. Fully taxable money market funds are funds to keep ample cash to pay redeeming depositors at face value, and invest new revenues at the fund net asset value.
What to Look for in Money Market Funds:
Compare management fees, which are calculated and reported in terms of expense ratios. Expense ratios tend to range between 0.10% and 0.50%. Over any length of time, those funds with the lowest management fees tend to outperform those with higher fees.
Check the rules of the fund's prospectus carefully to see what rules bind its leaders. Be sure that the fund invests only in the highest rated debt securities and that it maintains ample amounts of cash on hand to pay shareholders who are selling their shares.
Those funds with lower weighted average maturities (WAM) which is measured in terms of days will generally outperform in rising interest rate environments, and runs downward rate environments..
Some funds require minimum balances, require that additional deposit be of certain sizes and limit withdrawals. Try to avoid investing in funds that restrict your ability to buy and sell shares quickly.
Best Money Market Rates
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