As interest rates rise, savers and investors have the opportunity to earn decent returns in safe investments like money market funds. These funds invest in short-term securities issued by governments and corporations and are offered by various brokers and fund managers.
Investors earn income, or yield, from the securities held within money market funds.
Here are some top money market funds to consider for your portfolio.
Top Money Market Funds
- Vanguard Federal Money Market Fund (VMFXX)
- Schwab Value Advantage Money Fund (SWVXX)
- JPMorgan Prime Money Market Fund (VMVXX)
- Invesco Government Money Market Fund (INAXX)
- Fidelity Money Market Fund (SPRXX)
- Vanguard Municipal Money Market Fund (VMSXX)
*Data as of June 28, 2024.
Vanguard Federal Money Market Fund (VMFXX)
The Vanguard Federal Money Market Fund invests in cash and short-term securities issued by the U.S. government to provide current income and maintain high liquidity.
- Yield: 5.28%
- Expense ratio: 0.11%
- Fund assets: $301.4 billion
- Minimum initial investment: $3,000
Schwab Value Advantage Money Fund (SWVXX)
The Schwab Value Advantage Money Fund invests in short-term securities issued by U.S. and foreign entities to earn current income while maintaining stability and high liquidity.
- Yield: 5.13%
- Expense ratio: 0.34%
- Fund assets: $194.8 billion
- Minimum initial investment: None
JPMorgan Prime Money Market Fund (VMVXX)
The JPMorgan Prime Money Market Fund aims to generate current income with high liquidity and low volatility by investing in low-risk securities like U.S. government securities and highly-rated commercial paper.
- Yield: 5.03%
- Expense ratio: 0.50%
- Fund assets: $82.8 billion
- Minimum initial investment: $1,000
Invesco Government Money Market Fund (INAXX)
The Invesco Government Money Market Fund aims for high current income and stability by investing in cash, government securities, and repurchase agreements backed by government securities.
- Yield: 5.04%
- Expense ratio: 0.32%
- Fund assets: $5.5 billion
- Minimum initial investment: $1,000
Fidelity Money Market Fund (SPRXX)
The Fidelity Money Market Fund aims for high current income and stability by investing in short-term securities issued by domestic and foreign issuers.
- Yield: 5.03%
- Expense ratio: 0.42%
- Fund assets: $110.2 billion
- Minimum initial investment: None
Vanguard Municipal Money Market Fund (VMSXX)
The Vanguard Municipal Money Market Fund aims to provide current income exempt from federal taxes by investing in municipal securities.
- Yield: 4.0%
- Expense ratio: 0.15%
- Fund assets: $18.2 billion
- Minimum initial investment: $3,000
What is a Money Market Mutual Fund?
A money market fund is a mutual fund that invests in low-risk short-term securities to provide current income based on prevailing interest rates.
Money market funds aim to maintain a stable net asset value of $1.00 while offering high current income.
Money market funds are categorized as government, prime, or municipal, each with different investment strategies.
Money Market Funds vs. Money Market Accounts
Money market funds and money market accounts are different. Money market funds are mutual funds investing in short-term securities, while money market accounts are bank products offering higher interest rates.
Money market funds are not FDIC-insured, unlike money market accounts, and may carry low risk but can experience NAV fluctuations.
How to Choose a Money Market Mutual Fund
Consider factors like yield, expense ratio, fund type, and additional fees when selecting a money market fund.
Money market funds aim to provide high current income, liquidity, and stability, making them suitable for investors in the current interest rate environment.
Editorial Disclaimer: Conduct independent research before making investment decisions, as past performance is not indicative of future results.