About the Best Money Market Rates

Best Money Market Rates

Money market mutual funds represent a multibillion-dollar investment segment. They are a primary source of liquidity for corporations, pension funds and individuals. Money market funds are liquid and safe, which adds to their appeal. However, there are many variations that can prove difficult to understand without research.

Background

Money market funds are regulated under the Investment Company Act of the 1940th Money market funds managed by investment funds, which charge an administration fee to set up and operate a portfolio of securities, like any other fund. However, money market funds specifically cash, and buy only short-term safe securities. These range from commercial papers, treasury and agency debt and repurchase agreements. They are bound to be relatively short duration to provide daily liquidity.

Types

There are five types of money market funds to consider:

1. Prime. Prime investment in corporate commercial paper, repurchase agreements, treasury or other short-term, fixed-income types of investments.
2. Government. State investments only in Treasuries or government agency securities (Government National Mortgage Association, for example) and repurchase agreements.
3. Treasury. Money Boxes come in two types - those investing 100 percent in U.S. Treasury and those who invest in U.S. Treasury and repurchase agreements.
4. Tax-free. Tax-free investing in municipal securities or other instruments that are not taxed. Be aware that some of these funds avoid securities subject to the Alternative Minimum Tax (AMT), and some do not.
5. Offshore. These funds are typically denominated in U.S. dollars, but investing in short-term, fixed-income investments abroad.

Comparison

Mutual funds are baskets of stocks or bonds that have different prices each day. A Net Asset Value (NAV) is the total price of the fund, calculated at market close each day to reflect changes in the underlying holdings of the fund. Although money market funds, by definition, to keep a constant NAV of $ 1, dividends or interest paid by the Fund varies widely by market segment as well as the fund company. Prime funds will almost always give the highest yield, but also carry more risk simply because they invest in private companies may go bankrupt. The second highest yield comes from state funds because the government agency debt entails higher risks than the federal government. Last is the Treasury, the State debt is guaranteed by the federal government.

Select the type of fund is the most important decision. Secondary is the particular fund company. There are differences in yield, because managers can get lucky, or have better information. Sticking with familiar names such as Fidelity, Vanguard, Goldman Sachs and the like, are generally the least risky way to invest in money market funds.

Rates

Since money market funds invest in short-term liquid investments that change the content on a daily basis, the funds' yield changes on a daily basis. MMFs are not investments where you invest money and forget about it, you need to monitor rates closely to capture extra yield by moving funds (assuming transaction costs to do so is not prohibitive). The best price offered to institutional investors with large sums to invest. Today, these funds provide about 45 basis points, but most people can investors hope to get 20 to 30 or less. faithfulness, the largest fund company in the U.S., offers Fidelity Institutional Money Market by 48 basis points in yield from 11 September 2009, and a Fidelity Cash Reserves fund of 30 basis points. This is not to be confused with Money Market accounts in a bank which pays a higher rate (in days) in order to attract sufficient funds, but when interest rates rise over time, the money market accounts do not go up much, while money market funds will move in lock step.

Considerations

Money market funds and money market securities accounts play an important role in managing finances and providing liquidity to investment markets. Money market funds are ultra-safe, highly liquid vehicle for cash to move around in the economy, and money market accounts are an important tool to channel money into those investments.

Look closely at the instruments in which a money market fund investing, these are typically placed on the website of the Fund. Also, no detailed examination fees. Pay for a better preparation of investment is only interesting if the yield is greater than the fee. Finally, if you invest in a money market account, and only one money market fund offered, ask if other options are available, especially if you have a high balance.

Best Money Market Rates

The Best Money Market Rates

Best Money Market Rates

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