Money Market ETF

By: EconomyWatch   Date: 5 August 2009

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 Large organizations and the government invest in the money market to manage their short-term cash requirements. Individual investors can also access this market by investing in various securities, such as certificates of deposit (COD), treasury bills and commercial paper. While money markets are popular among mutual funds, this popularity is also spreading to exchange traded funds (ETFs). What gives money market ETFs an edge over money market funds is their low expense ratios.

 

Benefits of Money Market ETFs
 

A money market ETF:

  • Is an efficient and convenient solution to utilize free cash lying in a portfolio or in between two trades

  • Focuses on high quality assets

  • Have tight bid-ask spreads

  • Can be traded in the stock market anytime

  • Have high transparency. Thus, investors know exactly what securities are present in the portfolio every day.

 

Popular Money Market ETFs
 

Some of the popular money market ETFs are:

  • Claymore's Premium Money Market ETF: This was the first true money market ETF and was launched in Canada. Trading under the ticker symbol CMR, this ETF invests mainly in high-quality, short-term (for not more than 90 days) debt securities, such as treasury bills and promissory notes issued by Canadian governments or their agencies. These securities also include commercial paper and bankers acceptances issued by Canadian chartered banks, trust companies, loan companies and large firms.

  • WisdomTree Dreyfus Emerging Currency Fund: This fund was launched on May 6, 2009. The fund aims at providing exposure to money market rates spanning 11 emerging-market countries. It also tracks the currency movements in these countries in relation to the US dollar. The Mexican Peso, Brazilian Real, Chilean Peso, Indian Rupee, South African Rand, Turkish New Lira, Polish Zloty, Chinese Yuan, Israeli Shekel, South Korean Won and Taiwanese Dollar are included in the WisdomTree Dreyfus Emerging Currency Fund.

  • iShares Lehman Short Treasury Bond Fund:Trading under the ticker symbol SHV, this ETF tracks an index of US treasury bonds that have an effective duration of about 0.3 years.

 

 


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Most Popular in Exchange Traded Funds

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