These funds invest in short term (one day to one year) obligations such a treasury bills, certificates of deposit, and commercial paper.
Certificates of Deposit
Certificates of Deposit (CDs) are short or medium-term, interest-bearing debt instruments. CDs offer higher rates of return than most comparable investments, in exchange for tying up invested money for the duration of the certificate’s maturity. Money removed before maturity may be subject to a penalty.
These are unsecured obligations issued by a corporation to finance its short-term credit needs, such as accounts receivable and inventory. Maturities typically range from 2 to 270 days. Commercial paper is available in a wide range of denominations, can be either discounted or interest-bearing, and usually has a limited secondary market.