What is the main focus of a Money Market Fund?

The primary focus of a Money Market Fund is to invest in short-term, low-risk securities. These funds are designed to provide investors with a safe place to park their cash while earning a modest return. Money market funds typically invest in highly liquid and low-risk instruments such as Treasury bills, commercial paper, and certificates of deposit.

This investment strategy aims to maintain capital stability while providing liquidity and a small yield, making them attractive for conservative investors or those looking to preserve their principal. The short-term nature of the investments helps to reduce exposure to significant market fluctuations, thereby minimizing risk.

In contrast to other investment strategies, such as those focused on long-term growth or equities, a Money Market Fund prioritizes preserving capital and ensuring liquidity, which distinguishes it from options that involve higher risks or longer investment horizons.