Glossary
Cash Management Fund
A cash management fund is a type of low-risk investment vehicle designed to preserve capital and provide liquidity while earning modest returns. These funds typically invest in short-term, high-quality instruments such as Treasury bills, commercial paper, and certificates of deposit.
Who uses cash management funds?
They’re commonly used by businesses, institutions, and investors who want to park cash safely while earning a small return—such as during periods between major investments.
What do cash management funds invest in?
They hold highly liquid, low-risk securities like government bonds, repurchase agreements, money market instruments, and short-term corporate debt.
How are cash management funds different from money market funds?
They are very similar, though cash management funds may have more flexible investment guidelines depending on the issuer (e.g., mutual fund vs. institutional product).
Are cash management funds safe?
They are considered very low risk, though not entirely risk-free. They aim to preserve capital, but returns are modest and may not keep up with inflation.
Can individual investors use cash management funds?
Yes, although many are tailored for institutional investors. Some mutual fund companies and brokerages offer retail-accessible versions.
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