Best Money Market Funds in March 2024
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With rates of interest greater than they’ve been in a while, savers and traders are as soon as once more capable of earn first rate charges of return in comparatively secure investments equivalent to cash market funds. Cash market funds spend money on short-term securities issued by governments and firms and can be found from a number of completely different brokers and fund managers.
Traders in cash market funds earn revenue, or a yield, from the securities which are held inside the fund.
Listed below are among the high cash market funds to think about on your portfolio.
Prime cash market funds
*Information listed under is as of March 4, 2024.
Vanguard Federal Cash Market Fund (VMFXX)
The Vanguard Federal Cash Market Fund invests in money and short-term securities issued by the U.S. authorities. The fund goals to offer present revenue whereas sustaining a excessive degree of liquidity.
- Yield: 5.27 %
- Expense ratio: 0.11 %
- Fund belongings: $288.7 billion
JPMorgan Prime Cash Market Fund (VMVXX)
The JPMorgan Prime Cash Market Fund seeks to generate present revenue whereas offering a excessive degree of liquidity and a low volatility of principal. The fund invests in short-term securities that current minimal credit score danger equivalent to U.S. authorities securities, floating-rate debt issued by U.S. and overseas firms and highly-rated business paper.
- Yield: 5.07 %
- Expense ratio: 0.50 %
- Fund belongings: $85.4 billion
Schwab Worth Benefit Cash Fund (SWVXX)
The Schwab Worth Benefit Cash Fund invests in short-term securities issued by U.S. and overseas entities. The securities could also be issued by governments, firms or monetary establishments. The fund goals to earn the very best doable present revenue whereas sustaining stability and excessive ranges of liquidity.
- Yield: 5.19 %
- Expense ratio: 0.34 %
- Fund belongings: $180.7 billion
Invesco Authorities Cash Market Fund (INAXX)
The Invesco Authorities Cash Market Fund goals to offer a excessive degree of present revenue whereas sustaining stability and excessive liquidity. It invests basically all of its complete belongings in money, authorities securities and repurchase agreements backed by authorities securities.
- Yield: 5.02 %
- Expense ratio: 0.32 %
- Fund belongings: $5.4 billion
Constancy Cash Market Fund (SPRXX)
The Constancy Cash Market Fund invests in short-term securities to provide a excessive degree of present revenue whereas sustaining stability and a excessive degree of liquidity. The securities bought could also be issued by home or overseas issuers. The fund additionally invests in repurchase agreements and the business paper of monetary establishments.
- Yield: 5.03 %
- Expense ratio: 0.42 %
- Fund belongings: $105.0 billion
Vanguard Municipal Cash Market Fund (VMSXX)
The Vanguard Municipal Cash Market Fund goals to offer present revenue that’s exempt from federal revenue taxes whereas sustaining stability and a excessive degree of liquidity. As a result of the fund invests in municipal securities which are exempt from federal revenue tax, the yield is decrease than different cash market funds.
- Yield: 3.23 %
- Expense ratio: 0.15 %
- Fund belongings: $17.2 billion
What’s a cash market mutual fund?
A cash market fund is a mutual fund that invests in short-term securities with little or no credit score danger. These securities could also be issued by governments, firms or monetary establishments that reside within the U.S. or overseas. Cash market funds are thought-about to be low-risk investments that supply present revenue primarily based on the prevailing degree of rates of interest.
Cash market funds intention to take care of a web asset worth, or NAV, of $1.00, whereas offering a excessive degree of present revenue. Different mutual funds, equivalent to inventory funds, might intention to extend their NAV as their underlying investments carry out properly, however cash market funds search stability.
It’s straightforward to purchase and promote mutual funds, and this quick-start information reveals the important thing issues you’ll want to know.
Kinds of cash market mutual funds
Cash market funds are sometimes divided into three classes: authorities, prime and municipal. Right here’s what it’s best to learn about every sort.
- Authorities
- Authorities funds spend money on money, U.S. Treasury securities and repurchase agreements which are collateralized by U.S. Treasury securities.
- Prime
- Prime, or normal function, funds spend money on authorities securities in addition to business paper, certificates of deposit, short-term securities issued by home and overseas firms and repurchase and reverse repurchase agreements.
- Municipal
- Municipal or tax-exempt funds make investments nearly all of their belongings in securities which are exempt from federal revenue tax.
Cash market funds vs. cash market accounts
You could have seen banks or credit score unions reference cash market accounts and puzzled if these are the identical factor as cash market funds. The reply is not any. A cash market fund is a mutual fund that invests in short-term securities whereas a cash market account is a product that banks or credit score unions provide to clients that sometimes earns the next charge of curiosity than an ordinary financial savings account.
Maybe a very powerful distinction between cash market funds and cash market accounts is that cash market funds are usually not insured by the Federal Deposit Insurance coverage Companies, or FDIC, whereas cash market accounts are FDIC-insured.
Cash market funds include very low danger, however there have been situations the place funds “broke the buck,” that means their NAV dropped under $1.00, equivalent to throughout the 2008 monetary disaster. In these situations, the fund could also be liquidated and traders may obtain lower than $1.00 per share.
How to decide on a cash market mutual fund
Cash market funds are provided by numerous completely different monetary establishments equivalent to banks, brokerage companies and mutual fund corporations. Listed below are among the key elements to think about when selecting a cash market fund:
- Yield: You’ll need to evaluate a fund’s yield to different funds within the business to ensure you’re getting the very best return in your funding.
- Expense ratio: Funds cost an expense ratio, which comes instantly out of the return you in the end earn as an investor. All else being equal, the decrease the expense ratio, the higher it’s for traders.
- Kind of fund: Take into account whether or not you’d wish to spend money on a authorities, prime or municipal cash market fund. Municipal cash market funds could also be significantly interesting for these in excessive tax brackets.
- Different charges: Make sure you take note of any extra charges chances are you’ll be charged when shopping for and promoting cash market funds. Some brokers might cost mutual fund commissions, whereas others might cost charges for funds from sure fund households.
Backside line
Cash market funds intention to spend money on high-quality short-term securities that present a excessive degree of present revenue whereas sustaining liquidity and stability. The funds might spend money on authorities securities in addition to securities issued by U.S. and overseas entities. Municipal cash market funds make investments primarily in tax-exempt securities.
Cash market funds could be a good match for traders trying to profit from the present rate of interest setting or saving for a short-term objective. Take into account that whereas the funds are thought-about low danger, they aren’t FDIC-insured.
Editorial Disclaimer: All traders are suggested to conduct their very own impartial analysis into funding methods earlier than investing determination. As well as, traders are suggested that previous funding product efficiency is not any assure of future worth appreciation.