Liquid Asset Fund

liquid asset fund

See money market fund.

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Liquid Asset Fund

A mutual fund that invests exclusively in short-term, low-risk securities. Examples of investments in liquid asset funds are certificates of deposit and U.S. Treasury securities. Liquid asset funds attempt to keep their net asset values at $1 per share, such that only the yield changes. Liquid asset funds are usually not federally insured, but the risk is so low that they very rarely lose principal for the investor. However, yields are very low and thus liquid asset funds are subject to inflation risk; that is, the yield on a fund may be less that the inflation rate, resulting in a loss. They are more commonly called money market funds. See also: Money market security, Money market note, Break a buck.