According to reports from Mint, Union Money Market Fund has emerged as the best-performing scheme in the money market fund category with a 6.63% return based on one-year CAGR performance as of July 6, 2026. The fund has also delivered an annualised return of 7.24% over a three-year period. LIC MF Money Market Fund secured the second position with a 6.56% one-year return, followed by Bank of India Money Market Fund at 6.54%. Bandhan Money Market Fund and Tata Money Market Fund both posted 6.51% returns, rounding out the top five performers in the category.
As reported by Mint, the top five money market funds by one-year return show consistent performance across the category. Union Money Market Fund leads with 6.63%, followed by LIC MF Money Market Fund at 6.56%, Bank of India Money Market Fund at 6.54%, Bandhan Money Market Fund at 6.51%, and Tata Money Market Fund also at 6.51%. The data is based on direct plans and reflects the performance as of July 6, 2026, according to Value Research data.
According to Mint, money market funds are debt mutual funds that invest primarily in money market instruments with maturities of up to one year, in line with Securities and Exchange Board of India (SEBI) regulations. Their portfolios typically include treasury bills (T-Bills), certificates of deposit (CDs), commercial papers (CPs), repo transactions and other short-term debt securities. The short maturity profile helps keep volatility relatively low while ensuring investors can access their money with ease, making them suitable for investors with surplus money needing access within 1-2 years.
As reported by Mint, money market funds are suitable for investors with surplus money needing access within 1-2 years or when the timing of future expenses is uncertain. These schemes are primarily intended to preserve liquidity and earn modest returns, with performance influenced by short-term interest rates and RBI's monetary policy. However, they carry credit risk, interest rate risk, and potential liquidity issues during periods of extreme market stress. The funds are not completely risk-free and fall under the low-risk to moderate-risk category, making them unsuitable for investors seeking guaranteed returns or long-term wealth creation objectives.
