Debt: Money Market

What is it?

Money market debt funds invest in Money Market instruments with a maturity of up to 1 year.

Objective

A money market fund's primary objective is to generate income while maintaining sufficient liquidity and low-interest rate risk.

Suitability and opinion

These funds are a good option for risk-averse investors looking for a decent return in the short term. These funds aim to generate slightly better returns compared to bank FDs of similar tenure. The risk is very low in this category. But we believe that investors can avoid investing in this fund and invest in liquid funds if they want to park their money for up to 1 year. We feel this because debt funds have different categories even in the shorter time duration and this differentiation does not add any value to retail investors. These funds can help in short-term capital preservation but can't be used for long-term wealth creation.