Money Market Funds

Money market funds are also known as money market mutual funds in the U.S Money market funds are not in practice in Nepal. These instiutions issue shares that are redeemable at a fixed price (usually 1$) by writing checks. For example, if you buy 5000 shares for $5000, the money market fund uses these funds to invest in short term money market securities (treasury bills, certificates of deposit, commercial paper) that provide you with interest payments. In addition, you are able to write checks up to the $5000 held as shares in the money market fund. Although money market fund shares effectively function as checking account deposits that earn interest, they are not legally deposits and so are not subject to reserve requirements or prohibitions on interest payments.
For this reasons, they can pay higher interest rates than deposit at the banks. The first money market mutual fund was created by two Wall Street mavericks, Bruce Bent and Henry Brown in 1971. In 1977, money market mutual fund has assets under $4 billion; in 1978, their assets climbed to close to $10 billion; in 1979, to over $40 billion. And in 1982, to $230 billion. Currently, their assets are around $2 trillion. To say the least, money market mutual funds have been a successful innovation, which is precisely that we would have anticipated to happen in the late 1970s and early 1980s when investment rates took off past Regulation Q roofs.