Yoshiyoshi Hirokawa/Getty Photographs
As rates of interest stay, savers and traders can get hold of an inexpensive fee of return on comparatively secure investments similar to cash market funds. Cash market funds spend money on authorities and firms’ short-term securities and can be found from a number of totally different brokers and fund managers.
Cash market fund traders earn earnings or yield from securities held inside the fund.
Under are among the prime cash market funds to think about in your portfolio:
High Cash Market Fund
*The info listed under is as of July 30, 2025.
Vanguard Federal Cash Market Fund (VMFXX)
The Vanguard Federal Cash Market Fund invests in money and short-term securities issued by the US authorities. The fund goals to supply present revenues whereas sustaining excessive ranges of liquidity.
- yield: 4.23%
- Expense fee: 0.11%
- Monetary belongings: $356.8 billion
- Minimal preliminary funding: $3,000
Schwab Worth Benefit Cash Fund (SWVXX)
The Schwab Worth Benefit Cash Fund invests in short-term securities issued by US and international entities. Securities could also be issued by governments, companies, or monetary establishments. The fund goals to earn the best potential present income whereas sustaining stability and excessive ranges of liquidity.
- yield: 4.14%
- Expense fee:0.34%
- Monetary belongings: $241.6 billion
- Minimal preliminary funding: none
jpmorgan Prime Cash Market Fund (VMVXX)
JP Morgan Prime Cash Market Fund is making an attempt to generate present income whereas offering excessive ranges of liquidity and low principal volatility. The fund invests in short-term securities that supply minimal credit score danger, together with US authorities securities, floating debt issued by US and international firms, and extremely valuated industrial papers.
- yield: 4.05%
- Expense fee:0.48%
- Monetary belongings: $84.9 billion
- Minimal preliminary funding: $1,000
Investco Authorities Cash Market Fund (Inaxx)
The Invesco Authorities Cash Market Fund goals to supply a excessive degree of present income whereas sustaining stability and excessive liquidity. It mainly invests in repurchase agreements that help all complete belongings in money, authorities securities, and authorities securities.
- yield: 4.12%
- Expense fee:0.33%
- Monetary belongings: $6.4 billion
- Minimal preliminary funding: $1,000
Constancy Cash Market Fund (SPRXX)
The Constancy Cash Market Fund is investing in short-term securities to generate excessive ranges of present income whereas sustaining stability and excessive ranges of liquidity. The securities bought could also be issued by a home or international issuer. The fund additionally invests in repurchase agreements and industrial papers for monetary establishments.
- yield: 4.03%
- Expense fee:0.42%
- Monetary belongings: 132.9 billion {dollars}
- Minimal preliminary funding: none
Vanguard Municipal Cash Market Fund (VMSXX)
The Vanguard Municipal Cash Market Fund goals to supply present earnings exempt from federal earnings tax whereas sustaining stability and excessive ranges of liquidity. The funds spend money on native authorities securities which might be exempt from federal earnings tax, so the yields are decrease than different cash market funds.
- yield: 2.75%
- Expense fee: 0.11%
- Monetary belongings: 18.3 billion {dollars}
- Minimal preliminary funding: $3,000
What’s a Cash Market Mutual Fund?
Cash market funds are funding trusts which have little credit score danger and spend money on short-term securities. These securities could also be issued by governments, companies, or monetary establishments residing in the USA or abroad. Cash market funds are thought-about low-risk investments that present present earnings based mostly on the overall degree of rates of interest.
Cash Market Fund goals to take care of a web asset worth (NAV) of $1.00 whereas offering a excessive degree of present income. Different mutual funds, similar to fairness funds, intention to extend NAV because the underlying funding works nicely, whereas cash market funds are on the lookout for stability.
Shopping for and promoting mutual funds is straightforward, and this fast begin information exhibits you essential issues to know.
Cash market funds spend money on short-term securities and supply traders with further income that exceeds what they earn from holding money. Buyers ought to notice that cash market charges can reply shortly to modifications in rates of interest.
– Dr. James Royal, Bankrate Funding and Wealth Administration Principal Author
Forms of cash market mutual funds
Cash market funds are normally divided into three classes: authorities, prime, and native authorities. This is what you want to learn about every kind:
- authorities
Authorities funds spend money on money, US Treasury securities, and repurchase agreements secured by US Treasury securities.
- Prime
Prime or Normal Function invests not solely in authorities securities, but additionally industrial papers, certificates of deposit, short-term securities issued by home and international firms, buyback and reverse buyback agreements.
- metropolis
An area authorities or tax-free fund invests most of its belongings in securities which might be exempt from federal earnings tax.
Cash Market Fund vs Cash Market Account
You could have seen banks and credit score unions referencing cash market accounts and puzzled whether or not these are the identical as cash market funds. The reply is not any. A cash market fund is a mutual fund that invests in short-term securities, and a cash market account is a product {that a} financial institution or credit score union gives to prospects who usually earn greater rates of interest than a typical financial savings account.
Maybe an important distinction between cash market funds and cash market accounts is that cash market funds should not insured by the Federal Deposit Insurance coverage Company or FDIC, whereas monetary market accounts are FDIC insurance coverage.
Cash market funds have very low dangers, however there have been instances of funds “damaged” within the 2008 monetary disaster, that means that NAV fell under $1.00. In these instances, the fund might be liquidated and traders will obtain lower than $1.00 per share.
Learn how to Select a Cash Market Mutual Fund
Cash market funds are offered by a wide range of monetary establishments, together with banks, securities firms, and mutual fund firms. Under are among the key elements to think about when selecting a cash market fund.
- yield: We need to examine the yields of our funds with different funds within the business in order that we will get the very best returns on our investments.
- Price Ratio: Funds might be charged a price ratio. This comes immediately from the returns you in the end earn as an investor. As all the pieces else is equal, the decrease the expense ratio, the higher it is going to be for traders.
- Fund Kind: Contemplate whether or not you need to spend money on authorities, prime, or native authorities cash market funds. Native authorities cash market funds could also be notably enticing to folks inside excessive tax ranges.
- Different charges: Please pay attention to any further prices which may be charged when shopping for or promoting cash market funds. Some brokers might cost mutual fund charges, whereas others might cost fund charges from sure fund households.
Conclusion
Cash market funds intention to spend money on high-quality short-term securities that present excessive ranges of present income whereas sustaining liquidity and stability. This fund could also be invested in securities issued by US and international firms in addition to authorities securities. Native authorities cash market funds primarily spend money on tax-free securities.
Cash market funds need to be appropriate for traders trying to profit from the present rate of interest atmosphere or save for short-term targets. Please notice that funds are thought-about low danger, however should not FDIC insurance coverage.
Editorial Disclaimer: All traders are suggested to conduct their very own impartial analysis into funding methods earlier than investing choice. Moreover, traders suggest that previous funding merchandise efficiency shouldn’t be a assure of future value will increase.