Generally you will find that larger organzations and also the government invest in the money market which is a method of managing short term cash needs. However, more and more these days, particularly due to easy access to information and funds on the internet, individual investors are also accessing the markets and investing in a variety of financial vehicles such as treasury bills, commercial paper and certificates of deposit (COD).
Money markets are certainly popular among mutual funds but this is also now becoming popular with exchange traded funds (ETFs) too. Money market ETFs have an edge over money market funds due to their low expense ratios. And furthermore, the benefits of money market ETFs are seen to be…
- they focus on high quality assets rather than low quality
- its an efficient and at the same time convenient way to utilize cash that is available between trades or which is lying in a portfolio
- money market ETFs can be traded in the stock market at a time to suit the investor
- there is high transparency and the investor can see which securities are available in the portfolio at any one time
- the bid to ask spread is tight
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