United States Treasury Money Mutual Fund
Contents
Exploring United States Treasury Money Mutual Funds: A Comprehensive Guide
Understanding United States Treasury Money Mutual Funds
United States Treasury money mutual funds represent one of the most dependable investment options available in the market. These funds specialize in investing in U.S. Treasury bills, offering investors stability and high liquidity. Renowned for their low-risk nature, U.S. Treasury money mutual funds are often categorized under money market funds or low-risk fixed income categories.
Investing in Treasury bills offers a layer of security backed by the full faith and credit of the United States Treasury. This assurance stems from the robust economy and political stability of the country. Consequently, investors seeking steady returns and the preservation of capital often find these funds an attractive investment avenue.
Exploring U.S. Government Money Market Funds
Money managers in the financial sector provide various money market mutual funds that exclusively invest in U.S. Treasuries. These funds adhere to stringent accounting principles aimed at maintaining a net asset value of $1 per share at amortized cost. Governed primarily by Rule 2a-7 of the Investment Company Act of 1940, these funds are subject to rules governing the quality, maturity, credit quality, and liquidity of invested securities.
The regulations stipulate specific criteria for investment, ensuring that only the highest-rated debt securities are included in the portfolio. For instance, the average dollar-weighted maturity of investments cannot exceed 60 days. Additionally, liquidity rules mandate that a certain percentage of assets be readily convertible into cash within specified timeframes.
In response to the financial crisis of 2008, regulatory measures governing money market funds have been revised to provide enhanced security for investors. This was prompted by instances such as the collapse of the Reserve Primary Fund, which breached the $1 net asset value threshold.
U.S. government money market funds are often offered by brokerage service providers as cash sweep options or as part of no-transaction-fee fund offerings. Some of the prominent U.S. government money market funds include:
- Vanguard Treasury Money Market Fund (VUSXX)
- Fidelity Treasury Only Money Market Fund (FDLXX)
- American Century Capital Preservation Fund (CPFXX)
Delving Into U.S. Government Mutual Funds
Apart from money market funds, investment managers also offer U.S. government mutual funds that provide similar benefits. These funds, while not classified under the money market designation, offer comparable advantages with potentially slightly higher returns. U.S. government mutual funds encompass various durations, including short, intermediate, and long-term, with longer durations potentially offering enhanced returns.
Popular U.S. government mutual funds include:
- Eaton Vance Short Duration Government Income Fund (EALDX)
- Commerce Short Term Government Fund (CFSTX)
- Federated Hermes Total Return Government Bond Fund (FTRGX)
- Fidelity Intermediate Treasury Bond Index Fund (FUAMX)
- Vanguard Extended Duration Treasury Index Fund (VEDTX)
- Fidelity Long-Term Treasury Bond Index Fund (FNBGX)