The investing public has had a long standing love affair with money market mutual funds since the first fund was created in 1971. The Investment Company Institute, a mutual fund trade association, reported that as of January 13, 2011 there was $940.65b invested in retail money market funds and $1,855.82b invested in the institutional class.
What is a money market mutual fund?
A mutual fund is a pooled investment that invests contributions into a common portfolio and the shareholders of the mutual fund all have a pro-rata interest in the underlying holdings. If pooled investments did not exist imagine how hard, if not impossible it would be for the average investor to develop a portfolio? One person looking to invest $2,000 would have very limited choices, but if you create a vehicle that will accept the $2,000 from the investor and a thousand others with a similar goal then you have given the average investor legitimate access to a professionally managed portfolio.
There is no shortage of mutual funds and funds are available that invest in virtually every asset class from money markets to country-specific foreign funds. In fact, there are more mutual funds than there are stocks from individual companies.
