Money market funds place their assets in bonds and in deposits that can be redeemed in less than 13 months. Money market funds focus on maintaining the value of the investment, and have a relatively low rate of return. These funds function as an alternative to bank deposits, and as an acceptable short term place to put money, until a long term investment strategy can be developed.
Most money market funds are kept at a set share price, usually one dollar per share. The interest that the fund earns beyond that si distributed to its share holders in the form of dividends.
Usually, money market funds invest 95% of their assets in government bonds and in short term corporate bonds with extremely high ratings.
Investment in money market funds carries a high amount of inflation risk. Generally, money market funds are held as only one element in a larger financial portfolio.