Mutual Funds and Cmmm

1. What is a mutual fund? What is a money market mutual fund (MMMF)?

Mutual Fund

A mutual fund pools money together from thousands of small investors and then its manager buys stocks, bonds or other securities with it.

When you contribute money to a fund, you get a stake in all its investments. Most funds allow you to begin investing with as little as a couple thousand dollars, you can attain a diversified portfolio for much less than you could buying individual stocks and bonds.

Mutual funds are operated by money managers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus

Money Market Mutual Fund:

A money market fund is a mutual fund that invests solely in cash/cash equivalent securities, which are also often referred to as money market instruments.

These investments are short-term, very liquid investments with high credit quality.

A money market fund's purpose is to provide investors with a safe place to invest easily accessible cash-equivalent assets characterized as a low-risk, low-return investment. Because of their relatively low returns, investors, such as those participating in employer-sponsored retirement plans, might not want to use money market funds as a long-term investment option.

Money market mutual funds offer a convenient parking place for cash reserves when an investor is not quite ready to make an investment or is anticipating a near-term cash outlay for a non-investment purpose. Money market mutual funds offer ultimate safety and liquidity. This means that investors will have an expected sum of cash at the very moment that they need it.

Money market mutual funds are designed to offer features that are particularly suited to the needs of small investors. Minimum initial investments generally range from $500 to $5,000.

The defining feature of a MMF and...