What are 'United States Treasury Money Mutual Funds'

A United States Treasury money mutual fund is a mutual fund that pools money from investors to purchase low-risk government securities. A United States Treasury money mutual fund is a type of mutual fund that invests primarily or exclusively in U.S. government debt and repurchase agreements secured by Treasury bills. U.S. Treasury money mutual funds are a leading investment for investors seeking to preserve principal or invest idle cash temporarily.

BREAKING DOWN 'United States Treasury Money Mutual Funds'

U.S. Treasury money mutual funds are one of the industry’s best low-risk investments. These funds can generally be classified as either money market funds or found in low-risk fixed income categories. Treasury bills are secured by the full faith and credit of the United States Treasury, which helps to make these portfolios reliable sources of low-risk returns due to the country’s developed economy and political stability.

U.S. Government Money Market Funds

Money managers across the industry offer money market mutual funds that fully invest in U.S. Treasuries. U.S. government money market mutual funds follow standard accounting principles that help to keep their net asset value at $1 per share. These funds register as money market funds and are governed primarily by Rule 2a-7 of the Investment Company Act of 1940. Rules and regulations for money market funds have been revised to provide even greater security for investors since the 2008 financial crisis, when the popular Reserve Fund broke the buck by falling below its $1 net asset value.

Often, U.S. government money market funds managed by brokerage service providers will be offered as cash sweep options or no transaction fee funds. Some of the most popular U.S. government money market funds include:

Vanguard Treasury Money Market Fund

Fidelity Treasury Only Money Market Fund

American Century Capital Preservation Fund

U.S. Government Mutual Funds

Many investment managers across the industry also offer U.S. government mutual funds that are not characterized by the money market designation but offer many of the same benefits. These funds can offer slightly higher returns than money market funds with generally the same risk. U.S. government mutual funds can include short, intermediate and long-term durations, with longer term durations potentially offering enhanced returns. Some of the most popular U.S. government mutual funds include:

Eaton Vance Short Duration Government Income Fund

Commerce Short Term Government Fund

Federated Total Return Government Bond Fund

Fidelity Intermediate Treasury Bond Index Fund

Vanguard Extended Duration Treasury Index Fund

Fidelity Long-Term Treasury Bond Index Fund

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