A money market fund is a type of mutual fund that invests in high-quality, short-term securities that present minimal credit risk. These funds also pay dividends that generally reflect short-term interest rates. Although the net asset value per share of a traditional mutual fund changes daily in response to market factors, money market funds are structured to avoid these changes by seeking to maintain a stable net asset value of $1.00 per share.

Investors use money market funds for a variety of reasons. Like other mutual funds, money market fund shares can be bought or sold at any time. Money market funds also often provide check-writing privileges for shareholders. Some investors use money market funds as short term storage for cash between investments because money fund yields are typically competitive with those of most savings accounts.

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