# Take a closer look at money market funds Eyeing a yield offer? Read this first to avoid hidden risks and learn how to earn yield while maintaining liquidity. **URL Source:** https://www.brex.com/journal/taking-a-closer-look-at-money-market-funds --- Money market funds: Seeking returns and stability for your operating cash Consider more than yield I’ve been saying this for years, and I’ll say it again for the people in the back: Many of our competitors advertising higher yields are offering mutual funds that carry both principal risk and liquidity risk Risking a loss and reducing your liquidity in pursuit of a few extra basis points is not a tradeoff you need to make. Our [Brex business account](https://www.brex.com/product/business-account) lets you invest in a money market fund that seeks to maintain a stable net asset value (NAV) of $1 per share to offer you returns and stability, plus same-hour liquidity. The math that matters If you're comparing treasury products like the Brex business account, here are a couple of calculations that should make you pause. Right now, some competitors in the market are promoting a “high yield” treasury product that actually invests in a mutual fund trading at $9.98 a share. It was trading at $10.00 a share 6 months ago. If you bought it then, you'd have already lost 20 basis points on principal alone. Annualized? That'd be a 40 basis point loss. Instead of earning the high yield advertised, you’d have earned a lot less in reality. You could have even lost money overall depending on when you bought. All while tying up your cash due to the liquidity limitations of mutual funds. Similarly, I saw another “high yield” mutual fund drop almost 1% in price per share in a week, effectively slashing the yield to -12% APR during that timeframe. You’d have to stay invested for months just hoping to break even. Evaluating liquidity, stability, and yield How is Brex able to help you pursue returns, stability, and liquidity? By enabling you to invest in a money market fund that seeks to invest in 99.5% of its portfolio in securities issued or guaranteed by the US government, or cash. MMFs are subject to SEC regulations and requirements for portfolio composition and liquidity management and seek to maintain a consistent net asset value (NAV) of $1. On the other hand, mutual fund prices may be more likely to move up and down because they expose your investment to the stocks and bonds of everyday companies, which can lead to more volatility. Let's do a comparison: **Money market funds** - Seeks to maintain a NAV of $1.00 - Designed to seek to preserve your principal - Access your invested funds within a day — or [within an hour](https://www.brex.com/support/cash-transfer-processing) if you use Brex **Mutual funds** - Fluctuating share prices based on market conditions - Your principal is more at risk every day - Takes up to 3 days to access your funds Why this matters for growing companies Your primary job as a business leader isn't to maximize yield at any cost — it's to seek a return while helping to protect your principal and liquidity. When yield differences are measured in basis points, even small price movements in mutual funds can put your principal at risk. When your business is moving quickly, you can’t afford to have the value of your operating funds drop overnight, potentially forcing you to further lock in until the market improves. That’s why it’s worth considering the flexibility and agility that comes from investing in a money market fund that seeks to maintain steady NAV, via a treasury product that also offers and same-hour liquidity. The competitor playbook Since we announced that Brex offers a business account that lets you earn return and move your funds with same-hour liquidity, competitors have been trying to get your attention with a higher yield, often concealing the higher risk. Here's what’s happening in the market (and probably your inbox): - Competitors are offering "high-yield" products with quoted yields higher than ours. - They're using gimmicks like one-time bonuses and product giveaways. - They're pushing these products hard because they know the risks. They're essentially losing money to win business and collect logos. But at what cost to their clients? Choosing the right banking partner When evaluating treasury solutions, ask these questions: 1. What will help me preserve my capital? Consider MMFs that seek to maintain a steady NAV. 2. What's the real risk-adjusted return? Factor in potential principal loss and liquidity constraints. 3. Am I working with a long-term partner? Sustainable business models matter. Brex delivers in all three areas, offering reliability, liquidity, and return. Get started Always read the beyond the yield headline. You may find that money market funds offer what growing companies are looking for: returns and capital preservation. Even better, Brex offers same-hour liquidity too. Open a [Brex business account](https://www.brex.com/product/business-account) in minutes and start earning up to 4.36% today. ... _Definitions for this article_ - _Principal: The base amount of money you invested_ - _Liquidity: How quickly you can turn invested funds into spendable cash (i.e., a liquid asset)_ - _Yield: The income an investment generates, expressed as a percentage_ - _Return: The total gain or loss on an investment over a period_ - _Basis points: A standard measure for percentages in finance, 1 basis point = 1/100 of 1%, or 0.01%_ You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the FDIC or any other government agency. Brex intends to provide accurate information but cannot guarantee this content is current, correct, or complete. You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the FDIC or any other government agency You could lose money by investing in a money market fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time. Although the fund's board has no current intention to impose a fee upon the sale of shares, the board reserves the ability to do so after providing at least 60 days prior written notice to shareholders. Investors should consider the investment objectives, risks, charges, and expenses of a money market fund carefully before investing. To obtain a prospectus, or summary prospectus, if available, that contains this and other information about the fund, contact your financial professional or visit dreyfus.com. 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