What is a Money Market Fund? Posted on 01/09/2021 Definition of a Money Market Fund A money market fund is a type of mutual fund that invests in highly-liquid, low-risk near-term instruments. These instruments include the following: cash, cash-equivalent securities, and high-rated fixed income securities with a short term maturity (example: U.S. Treasuries). Money market funds were designed to give investors high liquidity with a very low level of risk. Investors invest in these funds to manage cash or short-term savings. Money market funds are not FDIC insured, unlike money market accounts. These funds behave like a mutual fund by issuing redeemable units or shares to investors.