What is an Institutional Money Market Fund?
It is a standalone legal entity that allows investors to ‘pool’ their short-dated surplus cash balances in order to achieve a competitive daily interest yield while retaining the right to same day access to their deposits if required. In effect, it is a collection of wholesale money market call accounts linked together to maximise liquidity efficiencies and economy of scale benefits – seen as an attractive alternative to traditional treasury deposits.
It is a pooled investment vehicle which invests in short-term money market instruments such as term deposits, commercial paper, floating rate notes and certificates of deposit. The primary goal is preservation of capital, followed by liquidity and yield. By ‘pooling’ investors’ short-term assets it allows them to achieve a competitive yield whilst retaining same day access to deposits if required.
