Money market fund

A fund holding very short-term debt, commonly sold alongside savings accounts as a cash-like holding. You own units in a portfolio rather than a claim on a single bank.

Example

It often appears beside deposit accounts on one platform page under a single cash heading, and it is not a deposit.

Important

Deposit insurance does not apply to it. What protects the holder is the quality and spread of the underlying holdings, so the guarantee limit that makes a deposit dependable is simply absent here.

Related terms

• Bank deposit — Money handed to a bank in exchange for a claim on it. The bank owns the money and lends most of it out; what you hold is a debt that institution owes you, repayable on the terms of the account.
• Deposit insurance — A government-backed guarantee that repays depositors when an institution fails, up to a stated limit, per depositor, per institution.
• Treasury bill — Short-term borrowing issued by a government, repaid at a stated amount on a stated date.
• Net asset value — The stated value of a fund's holdings less its liabilities, usually expressed per unit. In illiquid vehicles it is produced by a valuation process rather than by trading.

Lessons that explain it

• A deposit is a loan you made to a bank — Money in a savings account is not money you are holding. It is a debt the bank owes you, and what makes it safe is a government guarantee with a limit - not a property of money itself. (9 min)

All 578 terms in the Investing glossary