- An institutional money market fund has a number of benefits, including capital preservation, stability, and liquidity
- Institutional money market mutual funds are intended for large entities like corporations and governments
- Choosing a no load institutional money market fund will save you money but requires you to make your own investment decisions
Institutional money market no load mutual funds are not for all investors, and these funds are intended more for large institutional investors and not for individual investors. An institutional fund is one that requires a high investment amount, a figure that most individual investors do not have. These funds are intended for corporations, fiduciaries who invest large amounts on behalf of their clients, and government institutions. These funds offer shares which have lower expenses than retail mutual funds do, because so much is invested. Institutional money market mutual funds are based on bulk buying and selling, instead of smaller amounts of shares. Money market funds have many benefits, and these funds protect investment capital in exchange for returns which are lower than some riskier investment options. Many investors use money market mutual funds for capital that will be needed in a short time, because these funds are very liquid and keep the capital safe until it is needed. Money market funds invest in short term debt securities and instruments, and this time frame is normally less than six months and can be as short as a day or two. These mutual funds should be used for short term investments only, and are not intended to meet long term investment needs such as retiring or college funds for young children.
An institutional money market fund can be either a load fund or a no load fund. What this basically comes down to is whether you are willing to pay around seven or eight percent of your investment capital to have a broker or financial advisor direct you on where to put your money. No load funds do not charge a load fee, which is the equivalent of a sales commission to the advisor or broker that you use. Load fees can be charged at the beginning, when you first invest your capital, at the end when the funds are withdrawn, or a combination of these. No load funds do not pay a load fee but in exchange no investment advice is given either. Instead you choose the institutional money market mutual funds to invest in. Some investors believe that load fees are necessary, but this is not true if you are willing to do some research and compare the different money market mutual funds. Beware of funds which are stated no load funds but include high 12b-1 marketing fees. This is because one way that funds can hide load fees is by including them in the marketing fee instead. Look at the percentage that the marketing fee is when compared to the net assets of the fund, and if it is more than one quarter of one percent it is really a load fund pretending to be a no load fund.
Investing in an institutional money market mutual fund may be a smart choice if you have funds that will not be used for a short time. These investments protect your capital from losses, while allowing for a small return as well. The liquidity of money market funds mean that you can get your capital out when you need to without worrying about finding a buyer or how the market is doing. These investments are very stable, with the aim of keeping the share price at one dollar. There are no erratic swings like those seen in the stock market, so you will not face devastating losses. Choosing a no load institutional money market food makes good sense as well. No load funds allow you to put all of your investment capital to work earning a small return, instead of deducting part of the capital to pay the load fee.
