What is a money fund?

Money fund is a kind of open-ended fund, which gathers the idle funds in the society, different from other open-ended fund types, its investment target is the less risky money market instruments, with high security and liquidity, stable return, and the characteristics of "quasi-savings".

The money fund mainly invests in bonds, central bank bills, repo and other short-term financial products with high security, and its main feature is "no worry about the principal, the convenience of the current period, the regular income, the income of each diary, and monthly dividends". Currency fund only invests in the money market, such as short-term treasury bonds, repurchase, central bank bills, bank deposits, etc., the risk is basically no, its liquidity is second only to the bank's savings on demand, the daily calculation of income, generally a month to the proceeds of the fund shares, the income of one year time deposits is slightly higher than the interest rate tax exemption. Currency fund principal is relatively safe, the expected annual return of 3.9%, suitable for liquidity investment tools, is an alternative to savings. Due to the emergence of digital currencies, a new type of currency fund has emerged in the field of currency funds - virtual currency funds, also known as digital currency funds.

Characteristics of currency funds

1, strong liquidity

Currency funds have good liquidity and high capital security, which mainly stems from the fact that the currency market is a low-risk, highly liquid market. At the same time, investors can not be restricted by the date, at any time as needed to transfer the fund units. Therefore its liquidity is comparable to demand deposits.

2, principal safety

Money market instruments usually have a short maturity date, the average duration of the money fund portfolio is usually 4 to 6 months, so the risk is low, and its price is usually only affected by the market interest rate, so the money fund is usually regarded as a no-risk or low-risk investment tools, suitable for short-term investment of capital interest-bearing to prepare for the unexpected, especially in the case of high interest rates, High inflation, reduced liquidity and credibility of securities can protect the principal from loss. Therefore, money funds are also regarded as cash equivalents.

3, lower cost

Money funds usually do not charge redemption fees, compared with other types of funds, has a lower cost of investment, coupled with the convenience of funds in and out of the liquidity is also better, and its management costs are also lower, the annual management fee of the money fund for the fund's net asset value of about 0.25% to 1%, lower than the traditional annual management fee rate of the fund 1% to 2.5%.

4, higher yields

Most money funds usually have a yield comparable to that of treasury bonds, but not only that, because of its ability to invest in central bank bills, inter-bank bonds and other markets, the yield is usually higher than the savings rate of return, and can even reach the interest rate of one-year time deposits. In addition to this, money funds can also avoid hidden losses. When there is inflation, the real interest rate may be very low or even negative, the money fund can grasp the interest rate change and inflation trend in time, to obtain a stable higher income.

Money fund is one of the few financial tools that can be comparable to demand deposits in terms of liquidity and flexibility, which can be subscribed and redeemed at any time, and the redemption amount can be arrived at the account in 1 to 2 days, and its investment threshold is much lower than that of bank wealth management products, and it is also profitable on weekends and holidays, with no income gap, which not only revitalizes the investors' idle funds, but also truly transforms people "The idea that you have to save up a lot of money before you can invest in your finances.