Money Market Fund

Mutual Funds which invest only in low-risk securities such as government securities, certificates of deposit, or commercial paper of companies. For that reason, they are usually considered very low risk. Since they are low risk, they pay very low dividends or interest that usually reflects short-term interest rates. Unlike mutual funds that are invested in stocks, money market funds usually try to keep the net asset value of (NAV) of each share at a dollar. Therefore, the value of the money market fund is dependent on the yield or interest rate, which does vary. It is very rare for the NAV to fall below a dollar, called breaking the buck, but it can happen if the investments do poorly.