What Is a High-Yield Money Market?

A high-yield money market fund is a pool of corporate bonds and other debt instruments paying a higher rate of interest than conventional savings accounts . The funds are offered by banks and mutual fund companies. They pay regular interest and also provide liquidity to investors, who can withdraw their money freely at any time

High-Yield Holdings
# High-yield funds typically hold long-term corporate bonds. They may invest in foreign corporate bonds, foreign government bonds and “junk bonds” of companies with sub-prime debt ratings. The funds may enter into currency hedging transactions to protect the value of their investments in times of swings in the value of the dollar.
Minimum Balance
# Money-market funds offer investors greater safety than conventional stocks and bonds. Unlike bank deposits, however, the funds are not insured by the Federal Deposit Insurance Corporation, or FDIC. They require a higher minimum deposit than most bank savings accounts, usually requiring at least a $1,000.00 minimum initial investment. There may be a minimum amount also placed on subsequent investments, which can be waived if the investor sets up regular monthly deposits into the funds from her bank account.
Limits and Withdrawals
# Money-market funds offer the convenience of check-writing privileges, and many can be accessed with debit cards as well. Some funds set limits on the number of withdrawals account-holders can make each month. Some funds charge fees if the account holder wishes to exceed these limits. The funds also have a minimum balance requirement. If the investor wishes to make a withdrawal that would put the balance below the minimum, the fund may close the account.
Net Asset Value
# Money-market funds keep a $1 net asset value and strive to keep the share price stable. Although the rate of interest on the fund may fluctuate, its NAV should remain at $1.00. On occasion, particularly in the turbulent credit meltdown of 2008, some money market funds have lost net asset value and fallen below the standard price of $1 per share. This can happen when a significant holding in the fund loses all value because of a corporate bankruptcy.

source: ehow.com