Money Market Funds (MMF) :

Alternate Investment Options: Money Market Funds (MMF) for Short Term .

Smart investors are always alert to ensure that their funds are safe, provide good ROI and never keep their funds idle in Current or Savings accounts in Banks. In an environment of falling rates marked by caution towards Fixed Income instruments, money market market funds are emerging as the preferred option for Short term investments. These schemes are seeing increased investor interest interest, with AMFI data showing combined inflows of nearly Rs 43 K Crores in April and May 2025.

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This MMF scheme is quite handly and beneficial for those investors who want to park their funds for a short term, instead of Bank’s SB accounts. For example, a retired Person who gets substantial benefits like PF, Gratuity, LIC Maturity funds etc., may park his funds in this scheme till he makes up his mind to invest or spend on marriage etc.,  Similarly those who have sold their land, buildings etc.,and getting substantial inflow of funds, till they decide to reinvest in other assets or spend them on specific outflows, may use this scheme to park their funds in MMF, purely on short term basis.

What is MMF?

Money market funds are a category of debt Mutual funds that invest in high-quality, short term instruments such as Treasury Bills,Commericail papers, Certificate of Deposits etc.., These instruments typically mature within one year. Given their short duration and Low credit risk, these schemes aim to deliver  stable returns, higher than those of Banks deposits. These schemes offer T+1 liquidity.

MMF schemes are currently offering yields of 7.2 to 7.5 % which is certainly higher than Bank deposit schemes. While choosing MMF, investors may look for AAA rated or sovereign funds to minimize risks and AUM companies with good track record.

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