Top High Yield Money Market Funds In 2024

What is a Money Market Fund (MMF)?

A money market fund is a professionally managed fund that pools money from diverse sources to invest in low-risk, and highly liquid investment instruments. These funds invest in low-risk investment instruments including commercial papers, repurchase agreements, and US Treasury bills.

The objective is to offer low risk, and capital stability to investors who want to preserve their capital while earning returns. Due to their high liquidity rate and ease of exit, Money Market Funds are best suited for emergencies and short-term financial goals.

It is worth noting that money market funds are a type of mutual fund. Hence, they are also called the money market mutual funds.

There are several types of money market funds including the Government Money Fund, Prime Money Fund, Tax Exempt Money Fund and Treasury Fund.

1. Government Money Fund: As its name suggests, the Government Money Fund invests the bulk of its funds in government-backed securities and other government-issued securities. For a money market fund to qualify as a Government Money Fund, it must invest over 90% of its assets in government-backed securities or cash.

2. Prime Money Fund: Unlike the Government Money Fund which is overtly government-backed and security-centric, the prime money fund invests in low-risk corporate entities and government-issued commercial papers in similar proportions.

3. Tax Exempt Money Fund: This fund offers investors some tax advantages including exemptions from federal income tax, and state or municipal income taxes as the case may be. Fund managers identify tax-exempt securities for investors seeking to legally avoid taxes or leverage tax advantages to maximize earnings.

4. Treasury Fund: Treasury fund managers invest in U.S treasury securities including Treasury notes, Treasury bills, and bonds. While the returns on investment might be minimal, returns are guaranteed and the capital is secured.

Best Stock brokers

1

9.4/10

Go to broker

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Minimum deposit:

From $100

Review

The eToro broker was founded in 2007. The company promotes itself as a social trading platform working with traders from over 140 countries. The broker has several divisions operating under different jurisdictions and licensed by different regulators. For example, eToro (Europe) is licensed by the Cypriot regulator CySEC (109/10) and eToro (UK) is licensed by the British regulator FCA (583263). The broker also has a representative office in Australia and the USA.

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2

9.2/10

Go to broker

Your capital is at risk.
Via eOption's secure website.

Minimum deposit:

$1

Review

The eOption broker (eoption.com) is an American stockbroker headquartered in Glenview, Illinois. It has been operating since 2007 and is a member of FINRA (CRD#: 7297/SEC#: 8-21765) and SIPC. It specializes in options trading and also acts as an intermediary in trades involving the popular securities classes. The company offers low trading commissions, super-fast execution of orders, and modern platforms with an advanced set of analytical tools. In 2020-2021, eOption was recognized as the best options broker by several resources such as Investopedia, The Tokenist, Benzinga, Investormint, and NerdWallet.

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•Low commissions for options trading — $0.10 per contract plus $1.99 per trade.

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3

9.1/10

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Minimum deposit:

$250

Review

The Ally Bank broker is part of Ally Financial Inc., which is an American holding company. The original company was created in 1919 by the General Motors automobile corporation to conduct activities with its auto parts suppliers and associated automobile dealerships. In 2014, Ally started offering banking products, and since 2017, it has also offered brokerage services. Currently, it operates solely as an online bank and brokerage firm and has no physical branches. It does, however, offer favorable terms of cooperation at consistently competitive rates with professional round-the-clock support. The company's services are used by more than 8.1 million customers globally.

Pros/Cons

•It has official licenses for banking, dealer, and brokerage activities from reputable US regulators.

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•The company works only with US tax-paying residents.

•On the broker's website, there is no training on trading in various financial markets, nor is there a Forex glossary of terms.

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•Only registered users can ask a question in the online chat.

•There is a time-consuming procedure for opening an account, which in some cases takes up to two weeks.

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Best Money Market Funds to invest in right now

If you are going to stash your idle cash for a guaranteed return on investment, here is a review of the best money market mutual funds to consider:

Fidelity Money Market Fund (SPRXX)

Fidelity Money Market Fund is one of the highest-yielding money market funds in America. It requires a minimum entry threshold of one dollar, making it ideal for newbies or retail investors. The fund currently boasts a 5.07% 7-day yield, +0.46% YTD returns, and a 0.42% expense ratio.

The fund is majorly invested in US Treasury-backed repurchase agreements, certificates of deposits, and commercial debts. The fund’s Portfolio net asset stands at $102,832.40 and it doesn't charge a management fee or transaction fee.

Fidelity Government Money Market Fund (SPAXX)

Since its inception in 1990, this fund has continued to offer capital stability to investors. It requires a minimum entry threshold of one dollar. It boasts of +0.45% YTD, +4.98% 7-day yield, and a gross expense ratio of 0.42%. However, it doesn't charge a management fee.

The funds’ rather low net portfolio asset of $314,416.69, suggests a general preference for other money market funds. As you would expect from a government money market fund, the fund’s Portfolio structure majorly comprises U.S Treasury bills, government repurchase agreements, and Treasury coupons.

Vanguard Federal Money Market Fund (VMFXX)

This fund is exclusively managed by the Vanguard Fixed Income Group. It invests most of its funds in cash, purchase agreements and U.S. government-backed securities. This allows it to provide stable income while investors’ capital is preserved.

However, with a minimum investment of $3000, the Vanguard Federal Money Market seems to cater much more for institutional investors than your average retail investor or newbie.

The Vanguard Federal Money Market Fund boasts of 0.11% express ratio, 0.48 YTD returns, and 5.28% 7-day SEC yield. Its net asset stands at $288.7 b.

Vanguard Treasury Money Market Fund (VUSXX)

Launched in 1992 as a conservative low-risk and short-term maturity investment instrument for institutional investors, this fund invests majorly in U.S Treasury securities. It also invests in repurchase agreements and U.S. government-backed securities for profitability.

Vanguard Treasury Money Market Fund currently has an express ratio of 0.09%, 5.29% 7-day SEC yield, 5.42% compound yield, and 0.48% YTD returns. Like the Vanguard Federal Money Market Fund, the minimum entry threshold of the fund is $3000.

It is worth mentioning that this fund does not offer any tax advantage to investors as earnings are subject to income taxes.

Schwab Value Advantage Money Fund Investor (SWVXX)

Since its inception over 30 years ago, Schwab has continued to brace against all odds to offer one of the best money market funds rates in the United States. The fund’s objective of preserving investors’ capital while allowing them to earn income on the preserved capital is largely hinged on its airtight portfolio structure.

With a total net asset of $175,950,163,335.04, Schwab Value Advantage Money Fund Investor is one of the largest mutual funds globally. The fund boasts a 7-day yield of 5.22%, a net expense ratio of 0.340%, and 0.47% YTD returns.

The fund does not charge a management fee, and neither does it seem to have a minimum entry threshold.

T. Rowe Price U.S. Treasury Money Fund Z (PRTXX)

Low credit risk is the core of the T. Rowe Price U.S. Treasury Money Fund. The fund allows investors to earn a monthly income on their investment, which is invested by the fund in stable U.S. government-backed securities including treasury repurchase agreements, and U.S Treasury securities.

The fund currently has a net asset of $12.7 billion, 0.300% express ratio, 0.48 YTD returns, and a 7-day yield of 5.10%. It however requires a minimum of $2,500 for investment.

Invesco Premier Portfolio Institutional (IPPXX)

Established in 1947, this fund is one of the oldest money market funds globally. It pools capital from diverse sources to be invested in conservative investment instruments such as promissory notes, commercial papers, repurchase agreements and certificates of deposits.

Like most money market funds, the objective is the preservation of capital and consistent return on capital. The fund requires a minimum initial investment of $1000 to subscribe. It boasts of a 7-day SEC yield of 5.42%, $6,335,492,440 in total net assets, 0.25% expense ratio and 0.49 YTD returns.

T. Rowe Price Government Money Fund (PRRXX)

With a minimum initial investment requirement of $500,000 for the fund’s 1 class, and $2500 for its investors class, this fund has one of the highest entry thresholds in the U.S. Considering that the funds offer no special comparative advantage, it is rather unclear why the entry threshold is so high.

The fund boasts $10.7b in net assets, 0.32% gross expense ratio, 0.47% YTD returns, and a 7-day yield of 5.08%.

JPMorgan Liquid Assets Money Market Fund (MJLXX)

The fund invests in short-term money market instruments including bank obligations, corporate notes, funding agreements, and commercial papers for capital stability.

It requires an initial minimum investment of $1000 and subsequent investments of $50. It doesn't charge a management fee. However, it charges 0.60% in gross expense fees and 0.59% in net expense fees. The fund’s asset stands at $60.51 and it has a YTD return of 0.45% and a 7-day SEC yield of 5.10%.

BlackRock Wealth Liquid Environmentally Aware Fund Investor (PINXX)

The fund invests in a wide array of money market instruments including repurchase agreements, and commercial obligations. Its net expense ratio is 0.49% while its gross expense ratio is 0.81%. However, the fund does not charge a management fee.

Investors are required to have a minimum initial investment of $1000 to invest. The fund’s 7-day SEC yield is 5.03%, and its net asset is 2.09 billion. The incorporation of Environmental, Social, and Governance Measures (ESG) into investment decisions by the fund managers differentiates the BlackRock Wealth Liquid Environmentally Aware Fund Investor from the rest.

Best Money Market Funds Compared

How to choose Money Market Funds for Investment

There are several factors to consider before investing in a money market fund. The most important ones to consider include favorable money market funds rate, annual growth rate, portfolio structure, management fees, entry threshold, and growth dynamic over a five-year time frame.

1. Portfolio Structure: one of the major upsides to investing in the money market is its low volatility which allows you to preserve the capital while making a stable return on your capital. Hence, it is important to peruse a fund’s portfolio structure and ensure that the portfolio comprises low-risk investment instruments including government-backed securities, commercial papers, treasury bills and similar low-risk instruments. A portfolio structure with highly volatile instruments such as stocks, and cryptocurrency, should be well avoided.

2. Money Market Funds Rate: Money market funds are most suited for investors who want to preserve their capital in a low-risk, high-liquidity, and short-term fund. While these funds preserve the capital and offer a higher return than a savings account, returns are usually lower than less conservative and highly volatile instruments. It is desirable to place preference on market funds with higher funds rates than the lower ones.

3. Annual Growth Rate: Ascertaining a fund’s growth rate over one year enables investors to determine the profitability of a fund. The higher the annual growth rate, the higher the profitability, and vice versa. It is advisable to prioritize funds with a higher annual growth over the ones with a lower annual growth rate.

4. Management Fees: Returns on money market funds are usually low. It is counterintuitive to choose funds with exorbitant management fees which fundamentally reduces profit. The lower the management fees the better. Interestingly, there are funds with zero management fees to choose from.

5. Entry Threshold: Some market funds are designed for institutional investors who have more than a few stacks of dollars to spare. These funds typically set their entry threshold in minimum investment to sums a little bit over the roof. Entry threshold in minimum investment allowed must be considered before selecting a money market fund for investment.

6. Growth Dynamic Over a Five-Year Period: While a fund's annual growth rate is enough to ascertain profitability, you might want to take things a step further by checking the growth dynamic over five years. This is especially important if you are investing large sums of money over a long period. Checking growth dynamics over five years allows you to identify growth patterns for future profitability.

Is it a good idea to buy Money Market Funds?

Generally, it is a good idea to buy money market funds. However, buying, like every other investment decision including, investing in the best money market ETFs has its pros and cons.

Here are the pros and cons of buying money market funds now:

Can I lose money investing in a Money Market Fund?

Granted that money market funds are comparatively safer than most investments, it is possible to lose money investing in them. However, the chances that you'll lose 100% of your investment are extremely low. This only happens in rare occasions such as the 2008 financial crisis which resulted in the collapse of the reserve fund.

How to start investing in Money Market Funds?

• Search for a reliable broker with direct access to the money market fund.

• Register an account by providing the necessary information and documents.

• Fund the account with the required minimum investment.

• Purchase the desired money market instruments.

Are Money Market Funds safe?

Yes, They are safe. Money market funds have a low risk of loss by investing in consistently profitable market assets and government-backed securities. Funds guarantee investors free access to their capital at any time and without additional conditions.