The money market fund was a substitute to the bank accounts that would allow preservation of cash as a deposit and a return on the same. A money market fund refers to pool funds where people are allowed to borrow and lend in short-term securities usually less than one year at an interest such as in treasury bills and commercial notes. The yields are relatively higher than those of the bank and are regulated by the Investment Company Act of 1940. They are a significant financial instrument that provides liquidity in the economy.
The Money Market Funds maintains a stable net asset value (NAV) per share of $1.00 in the United States which should never fluctuate downwards according to the provisions of 40 Act under Rule 2a-7. In the event it does, the term “broke the buck” is used to describe this drop in value. Only three incidences of breaking the buck were recorded before the global economic crisis of 2008; implying money market mutual funds are safe and stable. In the management of such happenings, capital is drawn back to reimburse security losses and avoid funds breaking the buck.
About Bruce Bent II
Bruce R. Bent II is an American investor and entreprenuer. Bent II is quite knowledgeable in money market funds and other financial aspects. He attended Northeastern University where he graduated with his Bachelor’s in Philosophy.
He is the CEO, Vice Chairman and President of Double Rock Corporation; a financial technology company that provides financial services in the banking sector, broker-dealers, and retail markets. His excellent and well-informed choices and skills in financial services, asset and risk management, strategic planning, mutual funds, securities, and equities has been the catalyst for his success.
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