What are money market funds?

A money market fund is an investment opportunity that typically gives its shareholders a higher return than interest from a bank, notes the U.S. Securities and Exchange Commission. This type of mutual fund started in the 1970s.

Investors find that money market funds are safe, but the long-term return is not as high as bonds, highlights CNN Money. Shareholders who invest in this type of mutual fund must also note that money market funds are not FDIC insured, explains the Federal Deposit Insurance Corporation. Although it is a low-risk investment, consumers who take significant losses do not have government backing of their funds in a money market.