What is a short-term investment fund?

A short-term investment fund (STIF) is a type of fund that typically holds low-risk assets with short-dated maturities. The primary function of the fund is preservation of capital although a moderate return is normally achieved. STIFs normally invest in assets such as U.S. Treasury bills, notes and bonds.

Where have you heard about a short-term investment fund?

You may have heard about short-term investment funds from your broker or investment adviser. They can be a useful place to invest a portion of your capital when you need something safe and low-risk. Most investment managers offer STIFs and they’re generally highly liquid with low management fees.

What you need to know about a short-term investment fund.

Short-term investment funds invest principally in high quality, short-term securities in order to preserve capital and return a moderate yield. There are a range of funds available with slightly different risk profiles.

Some low-risk STIFs invest only in U.S. government backed securities with an average maturity of 60 days and offer only a low return. Others blend in commercial and mortgage-backed paper with maturities averaging 3 years and return a slightly higher yield.

STIFs are useful as part of your broader trading and investment strategy when you need to preserve some capital. They’re easily tradeable and normally come with low fees.