Money Market Mutual Funds

Money market mutual funds invest in assets such as treasury bills (T-bills), certificates of deposit, and commercial papers. If you are looking for a safe investment option, which will be short term in nature, then a money market fund is for you.

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Low risk

Low risk

Highly liquid

Highly liquid

Good for short-term investing

Good for short-term investing

Steady returns

Steady returns

List of Money Market Mutual Funds Based on Last 3-Year Returns

Fund Categories
ICICI Prudential Asset Management Company LimitedHDFC Asset Management Co LtdSBI Funds Management LtdKotak Mahindra Asset Management Co LtdNippon Life India Asset Management LtdAditya Birla Sun Life AMC LtdAxis Asset Management Company LimitedUTI Asset Management Co LtdMirae Asset Investment Managers (India) Private LimitedDSP Asset Managers Private LimitedTata Asset Management LimitedBandhan Asset Management Company LimitedDSP Investment Managers Private LimitedIDFC Asset Management Company LimitedHSBC Asset Management(India)Private LtdCanara Robeco Asset Management Co. Ltd.Franklin Templeton Asst Mgmt(IND)Pvt LtdEdelweiss Asset Management LimitedInvesco Asset Management (India) Private LtdQuant Money Managers LimitedMirae Asset Mutual FundPPFAS Asset Management Pvt. LtdSundaram Asset Management Company LtdMirae Asset Global Inv (India) Pvt. LtdMotilal Oswal Asset Management Co. LtdBaroda BNP Paribas Asset Management India Pvt. Ltd.PGIM India Asset Management Private LimitedLIC Mutual Fund Asset Management LimitedDaiwa Asset Mgmt. (India) Pvt. Ltd.Mahindra Manulife Investment Management Pvt. Ltd.Fund PineBridge Mutual FundJM Financial Asset Management LimitedBaroda Asset Management India LimitedUnion Asset Management Co. Pvt. Ltd.Principal Asset Management Private LimitedJPMorgan Asset Management India Pvt. LtdEdelweiss Mutual FundWhiteOak Capital Asset Management LimitedBajaj Finserv Asset Management Limited360 ONE Asset Management LimitedBank of India Investment Managers Private LimitedITI Asset Management LimitedNJ Asset Management Private LimitedNavi AMC LimitedICICI Prudential Asset Mgmt.Company LimitedFranklin Templeton Asset ManagementIDBI Asset Management LimitedQuantum Asset Management Co Pvt. Ltd.Samco Asset Management Pvt LtdTrust Asset Management Private LimitedHelios Capital Asset Management (India) Private LimitedGroww Asset Management Ltd.Taurus Asset Management Company LimitedShriram Asset Management Co LtdZerodha Asset Management Private LimitedOld Bridge Asset Management Private LimitedING Investment Mgnt (India) Private Ltd.Baroda BNP Paribas Mutual Fund


3Y return
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What are Money Market Mutual Funds?

Money market mutual funds are short term debt funds with a maturity of up to 1 year. These funds are invested in different money markets, offering a good return at the end of the tenure along with the fund being highly liquid. 

Moreover, short-term money market funds help governments and corporations to raise loans for financing needs. They are suited for investors who want stable returns over a short period. There are a few types of money market funds that you must remain aware about. They are:

  • CD or Certificate of Deposit
  • T-Bills or Treasury Bills
  • CP or Commercial Paper
  • Repos or Repurchase Agreements


Why Add Money Market Mutual Funds to Your Portfolio?

  • They have high liquidity
  • Very low risk
  • Ideal for short-term investment
  • Helps in financing governments and corporations

Advantages of Money Market Mutual Funds

Money market fund returns are best for those who want to invest for a short period. Let us look at the advantages it offers.

  • High Liquidity

    As money market mutual funds invest in short-term securities, they can be easily redeemed for cash. The maximum maturity period for investment in such securities is 1 year. Thus the liquidity of such funds is extremely high.

  • Investment In High-Quality Instruments

    Money market mutual funds invest in high-quality instruments. For example, T-bills are backed by the government. This makes it practically impossible for such an investment to suffer a loss. Similarly, commercial papers are issued by companies of repute. They are unsecured and the reputation of the company is the only guarantee of repayment.

  • Low Risk with Stable Returns

    As money market mutual funds invest in instruments with high credit quality, they carry low risk and ensure stable returns upon maturity.

  • Diversification

    Top rated money market funds invest in money market instruments. This leaves a fund manager with a range of options to choose from. Money market funds examples are certificates of deposit, commercial papers, T-bills, and repurchase agreements. This leads to the diversification of the portfolio.

  • Insulated From Stock Market Volatility

    Money market instruments are a safe investment in times of stock market volatility. In such times, the government can try to inject money into the economy by offering higher returns on government securities. So money market mutual funds can beat a downturn in the market.

  • Can be Better than Bank Deposits

    Like bank deposits, money market mutual funds are a fairly safe way to generate returns. But they can give even better returns than bank savings deposits.

Who Should Consider Investing in Money Market Mutual Funds?

Having learnt the pros and cons of money market mutual funds, let us now see who can benefit from investing in such mutual funds.

  • Risk-Averse Investors

    If you are not fond of risk and are new to investing, then putting your money into money market mutual funds would be a good way to start investing. Money market mutual funds offer stable returns with minimal risk. That makes it a good choice for conservative investors.

  • Short-Term Investors

    As an investor, if you have short term, financial goals to fulfil, then this type of mutual fund is highly feasible. You get to invest your money for a short period, with stable income and an option of high liquidity, thus helping you fulfil your short term needs.

  • Investors with Excess Money

    If a person has surplus cash which is not immediately needed, then she can take advantage of money market mutual fund rates. Thus the money will not lie idle and grow with time.

Points to Consider Before Investing in Money Market Mutual Funds

Here are some factors investors have to consider before investing their hard earned money in money market mutual funds.

  • Expense Ratio

    The expense ratio is the amount charged by a fund house for managing the mutual fund. A lower expense ratio will ensure more returns and vice versa.

  • History of the Money Market Mutual Fund

    Use the past performance of the mutual fund to judge where it will be in the future. This will also let you compare it with other money market mutual funds.

  • Skill of the Fund Manager

    You should evaluate the credentials of the fund manager. The fund manager’s experience and skills are vital to the fund’s success.

  • Duration of Investment

    If your goal is short-term investment, then you can invest in money market mutual funds. However, for a longer investment duration, you should look for other options.

  • Appetite for Risk

    Money market mutual fund is a suitable option if you are someone not looking to take risk with your funds and investments. Hence, if you are someone expecting high returns from investment and have no issue with taking risk, this mutual fund will not be highly suitable.

  • Taxation

    Holding money market mutual funds for up to 3 years invites short-term capital gains tax. The income tax slab of the investor is used to tax the returns. On holding the mutual fund for more than 3 years, capital gains tax is applicable at 20%.

Limitations of Investing in Money Market Mutual Funds

Even the best money market mutual funds come with their share of limitations. Here are some of them.

  • Credit Risk

    Credit risk refers to the chances of an issuer of a bond or security not paying the interest or principal amount. This is the biggest risk when it comes to money market mutual funds. Ideally, the risk is low, but a wrong portfolio selection can see the risk rise.

  • Low Returns

    As the risk is low, the returns are also not very high. Investment in other mutual funds can give better returns than money market mutual funds. Moreover, though they can outperform traditional savings accounts, they do not offer a fixed return like a fixed deposit.

  • Not Good for Long-Term Investment

    Money market mutual funds give good returns over the short term. But if you are planning to invest over the long term, you should invest in other mutual funds such as dynamic bond funds.

  • Inflation

    During the time of inflation in the market, the conditions tend to become volatile due to which your returns get affected. Even if the risk is low, market changes can damage your fund’s returns.

  • Low Growth Potential

    Capital preservation is as important as capital growth when it comes to money market mutual funds. This makes it a poor choice for investors looking for long-term growth.

  • Interest Rate Risk

    The prices of money market instruments are inversely proportional to interest rates. If interest rates rise, this will lead to a fall in the price of money market instruments. The longer the investment, the more an instrument will be sensitive to interest rate changes.

How to Start Investing in Money Market Mutual Funds with INDmoney

After you have understood what Money Market Funds are, it is time for you to start your investment process with INDmoney. Below are some simple steps to follow to start your mutual fund's investment journey with us.

  • Step 1

    Download the INDmoney app and create your free investment account by completing your KYC ( Know Your Customer).

  • Step 2

    Once your Free investment account is ready, you can either search for a Money Market Fund or go to the mutual fund section and tap on Money Market Funds inside Debt Funds Catalog.

  • Step 3

    Choose a Money Market Fund by looking at aspects like past returns, volatility, downside capture ratio, AUM, Expense ratios and underlying stocks and sectors.

  • Step 4

    You can choose to set up SIP in Money Market Funds or even invest as lumpSum. Once you are on the individual Money Market Fund page click from the bottom “One-time” for lump sum investment or “SIP” for systematic investment plan.

  • Step 5

    Choose the amount that you want to invest as SIP or LumpSum. 

  • Step 6

    Set up payments. If you choose to set up SIP in Money Market Funds,  you can do a free automatic pay set up via bank mandate or UPI. If you choose to invest in lumpsum (one-time) then you can pay via UPI, netbanking, NEFT or RTGS.

Should You Invest in a Money Market Mutual Funds?

Are you looking for stable returns with almost zero chances of suffering a loss? In that case, investing in money market mutual funds could be the right option for you. If your risk appetite is low, then you can park your money in it for the short term. You can find the best performing money market funds on the INDmoney website or by downloading our app.

Frequently Asked Questions

You can study money market mutual funds on our website. Ultimately, you need to take a call as per your goals and capabilities.

An ideal investment lasts up to 1 year.

They invest in instruments such as T–bills, repurchase agreements, commercial papers, and certificates of deposit.

They are a safe form of investment with almost no chance of default or loss.

You can expect moderate returns. You must study the past performance and investment portfolio of a mutual fund to judge its potential outcome.

It depends on your goals, risk appetite, and ability to invest.

They are taxed under capital gains tax. Short-term capital gains tax is applicable if they are held for up to 3 years. On holding them for more than 3 years, long-term capital gains tax is applicable.

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