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The size, scope, and availability of MMFs have grown exponentially over the past four decades. As a result, there are many kinds of MMFs that give investors exposure to all types of fixed income instruments, including government securities, tax-exempt municipal securities, and corporate debt securities.
For the purpose of this article, we will break down MMFs into three categories: prime, government, and tax-exempt. In all these cases, MMFs are regulated by the U.S. Securities and Exchange Commission (SEC).
As of May 31, 2019, more than $1 trillion in assets under management (AUM) were held in prime funds, according to the SEC’s latest MMF Statistics report. More than 60% of the total was held in Prime Institutional funds. Examples of prime money market funds include the Vanguard Prime Money Market Fund (VMMXX) and the BlackRock Liquidity FedFund Administration (BLFXX).
Government money market funds underwent a definitional change in 2014. As a result, these funds now have the option of omitting liquidity fees and redemption gates. Both tools are used by fund managers to discourage investors from withdrawing their assets. Government funds that employ liquidity fees and redemption gates are classified as ‘Government (Fees and Gates)’ funds.
Government money market funds were valued at more than $2.4 trillion as of May-end 2019. Examples of government money market funds include American Century Capital Preservation Fund (CPFXX) and the Fidelity Government Money Market Fund (SPAXX).
Be sure to check our News section to keep track of the recent fund performances and developments in the mutual fund industry.
Since 2014, tax-exempt funds have been divided into two categories based on investor type. Funds that are designed for individual investors are called Tax Exempt Retail, which is allowed to maintain a stable net asset value per share. All other tax-exempt funds are called Tax Exempt Institutional and have a floating net asset value per share.
As of May 31, 2019, tax-exempt funds had nearly $140 billion in assets under management, with more than 90% being held in retail funds.
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