National Tax-Exempt Money Market Fund

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National Tax-Exempt Money Market Fund

A mutual fund that invests predominantly or exclusively in municipal bonds with maturities of less than one year. Tax-exempt money market funds are intended to provide a return at little risk (compared to other investments) that is nonetheless better than the risk-free rate of return. Because it invests in municipal bonds, dividends from the fund are tax-free at the federal level (though they may be subject to state tax unless all bonds in the fund are issued in the state where the holder resides).
References in periodicals archive ?
Tax-exempt money market funds have recently showed renewed strength after several years of lackluster yields in a prolonged low-interest-rate environment.
Prime and tax-exempt money market funds that are sold to institutional investors must price their shares and transactions using a "floating" net asset value (NAV), rather than the stable $1 NAV that such funds have long maintained.
Tax-exempt money market funds and other tax-advantaged investments, such as municipal bonds, may be attractive options for corporate cash reserves.
Bolton says that there are also national and single-state tax-exempt money market funds that can provide tax-free interest on cash you're parking for the short-term.
This study has shown that tax-exempt money market funds have replaced the banking sector as the primary market for short-term securities.
Similar rules are being studied for tax-exempt money market funds and a proposal may be forthcoming from the SEC in early 1992.
Should a Fund seek to issue VRDP, the timing of the Fund's issuance may vary and is subject to various factors, including, but not limited to, approval by the Fund's Board of Directors/Trustees, the availability of liquidity providers, the willingness of tax-exempt money market funds to invest in VRDP, the ability to obtain necessary ratings for the VRDP and other market conditions.
Such issuance of VRDP will depend on market conditions, the willingness of tax-exempt money market funds to invest in VRDP, obtaining necessary ratings for the VRDP, the need to comply with applicable laws and regulations, and on the agreement by all parties, including the liquidity provider and others to final terms of the transaction, among other factors.
Finally, Fitch notes that the fund has consistently delivered above-market yields relative to other tax-exempt money market funds.
NEW YORK -- Fitch Ratings has affirmed the ratings assigned to the following two tax-exempt money market funds (MMFs) managed by Federated Investment Management Company (Federated):
Notwithstanding the challenges faced by state and local governments, tax-exempt money market funds have managed their credit exposures primarily via short tenor investments in variable-rate demand notes (VRDNs) backed by banks' letters of credit (LOCs) or stand-by purchase agreements (SBPAs);
She also earned a Lipper Performance Achievement Certificate for the USAA California Money Market Fund, which ended 2008 with the highest returns for the 1-year period in the California tax-exempt money market funds category.