The combined share holding is called mutual fund portfolios and each share is a symbol of an investors proportionate ownership of the funds holdings and the income those holdings generate.

There are more than ten thousand mutual funds are available in the market as of today. Being a collection of scores of stocks, one might think choosing or selecting a mutual fund is awfully simple. But choosing one mutual fund among thousands is rather a difficult process. If investors are looking for respectable return, it is relatively safe investing in money market funds. However, never think it is always a safe bet.

Money market fund of funds that generally invest in the short-term financial instrument, i.e. money markets. Money market fund take the money and invest in a similar fashion the deposit accounts at the bank functions. They share a proportion of those earnings from the investment with investors in the form of dividends, generally monthly basis. Even though there are different alternative money market funds by and large give a monthly dividend.

Money market mutual fund of funds have been extremely popular for more than 30 years now. It is still a very popular financial instrument for investors to park their money. Money market mutual funds, by and large, invest in

short term instruments and always mature in less than 13 months. Thirteen month is the maximum maturity period. It is important to know that keeping a short time investment maturity frame, help investor to reduce the risk. Reduced risk is one of the main attractions towards money market funds. Fund specialist Pradeep Achuthan says, the longer you loan money, better the possibility to take place something and wont be able to pay you back. Therefore, they are an eye-catching substitute to bank accounts, he said.

There are many advantages. Firstly, these kinds of funds, in general, invest only in short-term debt mechanisms. They, on average, turn out interest rates that double what a bank can normally put forward in a savings account. It provides better returns than Certificate of Deposit as well. It is important to understand that money market funds are a secure place to invest if one is keen in storing money for crisis or saving for an interim period. Since money market funds offer superior returns with risk reduction than most investment mechanisms, it is worth considering money market funds is an option for parking the cash and are an attractive substitute to bank accounts.

Secondly, the attractiveness of money market fund is the liquidity feature. It often provides the privilege that the individual can write checks out of the account. It is possible to take money out of money market funds on a short notice. Money market funds are very liquid. Under money market funds, it is possible to maintain the money in an investment that alters to the market, if the investor wants to take benefit of increasing interest.

Thirdly, investors dont need to pay any penalty for taking money out of money market fund. The investor can write or use, liquidity feature, checks from money market account.

Money market funds, unlike Certificate of Deposit, are not FDIC insured. However, they are still very safe and sound for the reason that they are having different secure investments like government securities. Since the government has the capacity to move up taxes to convene its obligations, government debt securities are regarded as the best bet and secure. Pradeep Achuthan says that it is very difficult to lose the principle in money market funds. In addition to all these, most mutual funds have some sort of insurance cover for investors money and this provides an additional security to investor, he further added.

However, this doesnt mean money market fund of funds is a real safe bet. Even though no money market fund has at all failed, nevertheless numerous banks have failed and scores of investors lost over hundreds of thousands. Pradeep Achuthan cautioned.

Ever and again investment has advantages and disadvantages, so with money market mutual fund investments. Advantage and disadvantage varies individual to individual. It is purely subjective. Mutual fund features that matter to one may possibly not vital to another. On the whole, people think Money market funds has some disadvantages.

Firstly, by accepting the fact that money market funds have relatively low risks than most other investments. However, money market funds always endeavour to maintain their net asset value, value of one share in a fund, at a stable level $1.00 per share. Net Asset Value can fall below as well when the investment badly performs. As Pradeep Achuthan stated before, though no money market fund has at all failed, nevertheless numerous banks have failed and scores of investors lost over hundreds of thousands. So, albeit investor losses have been really exceptional, but are likely.

Secondly, investor wont be having any idea about returns from the investment the coming months. The rate could either go up or down. Very good if goes up. If not In short, whatever be the earnings, either up or down, very important to note that this vagueness clearly tells that money market fund rates are variable.

Thirdly, money market funds always have inflation risk. Over the time, it is the inflation risk that will out perform and wear away all the investment returns. So, inflation threat gives an impending alarm for investors in money market funds. Of course, money market fund pay greater return than most of the bank accounts. However, dividends generally reflect short tern interest rates. These returns have been lower than bond or stock funds that of course has greater risk than money market funds.

According to Georgee Mathew, senior accountant and advisor, when it comes to money market funds, you have options and are simple to find at brokerage houses and mutual fund companies. Money market funds carry no possibility for capital appreciation.

Money market fund of funds provide stability, far above the ground, of principal and moderate current income with immediate liquidity for a vigilant investor. However, make sure that you ask yourself whether money market fund is the right choice for you or not.