Money mkt funds can yield better returns than liquid funds in 6-12 months

Before investing, check the proportion of A1+ holdings and their composition

Inflows into money market funds (MMFs) plunged from about Rs 44,573 crore in July to about Rs 2,210 crore in August, according to data from the Association of Mutual Funds in India (Amfi).

 

How they work

 

MMFs invest in instruments with a maturity of up to one year, including treasury bills (highly safe instruments issued by the government), certificates of deposit (CDs, issued by banks and regarded as safer than instruments issued by corporates), commercial papers (CPs, issued by corporates, with risk depending on the issuer), and repos.

 

They differ from liquid funds, which invest in instruments with a maturity