Definition
A mutual fund holding very short-term, high-quality debt (Treasury bills, government paper, top-grade corporate IOUs) that aims to keep its share price fixed at $1.00 while paying yields that track short-term interest rates. It is the default cash parking spot inside brokerage accounts. It is an investment, not a bank deposit: no FDIC insurance, unlike the similarly named money market account.
Why it matters
When short-term rates are high, idle brokerage cash earns meaningfully more in a money market fund than in a default sweep or checking account. The trade is insurance: the $1.00 price is an aim, not a guarantee, though funds breaking it is historically rare.
Example
A saver parks a $30,000 house down payment in a brokerage money market fund for 18 months. At a 4% yield it earns about $1,800 while staying one business day from cash, versus about $110 in a 0.25% checking account. Their emergency fund stays separately at an FDIC-insured bank.
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.