A money market mutual fund is a type of fixed income mutual fund that invests in debt securities characterized by their short maturities and minimal credit risk. Money market mutual funds are among the lowest-volatility types of investments. Income generated by a money market fund can be either taxable or tax-exempt, depending on the types of securities in which the fund invests.
Regulations from the U.S. Securities and Exchange Commission (SEC) define 3 categories of money market funds based on investments of the fund—government, prime, and municipal. SEC rules further classify prime and municipal funds as either retail or institutional based on investors in the fund.
Types of money market funds
The types of debt securities held by money market mutual funds are required by federal regulation to be very short in maturity and high in credit