What they hold
Typical holdings can include short-term government securities, bank deposits, commercial paper and other money-market instruments, depending on the fund mandate and local rules.
The mix of assets affects both return and risk.
Where returns come from
Returns mainly come from interest earned on the underlying portfolio after fees and expenses.
As market interest rates change, the return available from new short-term instruments can change as well.
Liquidity is not identical everywhere
Some funds process withdrawals quickly while others have cut-off times, settlement periods or other conditions.
Always separate the idea of a liquid fund from the actual withdrawal terms of a specific product.
General information only. Investment products can lose value, and terms, fees and regulation can change.