Short-Term Investment Fund (STIF): What it is, How it Works

By
James Chen
Full Bio

James Chen, CMT is an expert trader, investment adviser, and global market strategist.

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Updated July 07, 2022
Reviewed by Akhilesh Ganti
Fact checked by Kirsten Rohrs Schmitt

What Is a Short-Term Investment Fund (STIF)?

A short-term investment fund (STIF) invests in short-term money market investments of high quality and low risk. This type of fund is viewed as one of the most conservative investments in the financial industry. In addition, short-term investment funds are generally considered to be liquid investments and earn marginally higher returns than a standard personal savings account.

Understanding Short-Term Investment Funds

Many short-term investments funds provide investors with personal checks and some also give investors online access to make deposits and withdrawals, or view monthly, annual, and quarterly statements. Investors can make deposits and withdrawals to these funds whenever they want; many advertise 100% daily liquidity.

Key Takeaways

  • Short-term investment funds are highly liquid accounts that offer higher returns than savings accounts.
  • Returns are often tied to returns from a Treasury bill index.
  • STIFs sometimes offer checks and online access for withdrawals and deposits.
  • Money market funds are broadly known as short-term investment funds.

Short-term investment funds offer investors the opportunity to protect capital while earning a marginal rate of return. Many short-term investment funds benchmark their fund returns to a Treasury bill index. Short-term investment funds typically include cash, bank notes, government bills and conservative bond holdings characterized as safe short-term debt instruments.

Investors who seek a short-term holding before moving their investments to another investment such as stocks or mutual funds often use short-term investment funds as a parking place before the money is deployed. STIFs funds traditionally have low transaction costs and minimal management fees, usually well below 1% per year.

Short-Term Investment Fund Managers

Money market funds are the most broadly known short-term investment funds. Below are examples of investment providers that offer a wide array of money market funds for investors.

  • Schwab: Schwab Purchased Money Funds are grouped into three categories: prime, government and treasury, and municipal.
  • Vanguard: Vanguard offers two taxable money market funds and three non-taxable municipal funds.
  • JPMorgan: JPMorgan offers six money market funds.
  • American Century: American Century offers six funds in its money market category.
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  1. Charles Schwab & Co. "Schwab Purchased Money Funds."

  2. Vanguard. "Vanguard Mutual Funds."

  3. J.P. Morgan Asset Management. "Money Market Funds."

  4. American Century Investments. "Featured Funds."

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