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.