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Aren't money market mutual funds designed to limit your risk of loss in value, although it's not guaranteed, they are fairly safe?

They are considered quite safe. There are duration, diversity and credit quality restrictions. I would have to do some digging, but my recollection is the average duration has to be under 91 days and the max duration of a single issue something like 390 days (just a little longer than a year). For non-federal debt, the fund's portfolio can contain up to just a limited percent of any one issuer's short-term debt. Also, the credit quality for something like 90% of the holdings must be rated among the top two or so credit ratings as rated by one of the corporate credit rating services, and the rest could be unrated debt but the fund manager should have reason that the issuer would be among the top quality if it did pay to have its credit rated.

So, because of these diversity, duration and credit quality restrictions, money market funds are considered very safe.

Also, if I am not mistaken, shares of a money market fund are protected by SPIC insurance, even thought the value of the shares aren't.
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