What Are Yield Money Market Mutual Funds ?
Mutual funds fall into three different types of funds based on their profile. The mutual funds are always managed by a fund manager who looks after the investments. A mutual fund pools in the money from various investors, and then invests that money in a single type of fund, which is in turn a group of companies that the mutual fund company trusts. |
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Based on the type of investments the mutual fund is holding, it is categorized into a high risk, medium risk and a low risk fund.
A high risk mutual fund will be a high yielding type, which means that the dividends distributed is high. The mutual fund concentrates on junk bonds and also high risk bonds. Usually these types of bonds and stocks give high rate of interest. The problem with this type of investment is that though in the beginning the returns may be high, you may experience a steep fall. That is why it is called a high risk investment.
In a medium risk mutual fund, the company will invest in stocks, shares, bonds and money markets. It basically spreads the risks in all types of investments. Like it will have a few high risk stocks or bonds and then some medium risk ones and also some low risk ones. So the earnings are averaged out and also will be stabilized.
In a low risk mutual fund the company only concentrates on bonds that are either government or good rated companies. In this type of bond the income from dividends may be actually low.
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