 Equity Investing Information |
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Money Market Funds
Backed entirely by cash, money market funds are one of the lowest risk investment vehicles currently available in Canada. Although the unit value of a money market fund isn't guaranteed, their value is backed by guaranteed securities, meaning that a decline in market value is virtually unheard of in most developed economies. Most money market funds invest in GICs, commercial paper, and short-term government bonds. Minor changes in interest rates and other economic factors cause the return one these investments to fluctuate over time, meaning that the expect interest rate on money market funds will often vary slightly on a day-to-day basis. In addition to Canadian money market funds, many financial institutions offer similar instruments denominated in U.S. Dollars or other currencies. These investment vehicles offer the same low-risk characteristics, but will obviously fluctuate in their real value, according to currency exchange rates. |
© 2006, Jeremy Maddock