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Chapter 11. The Name Game—Understanding ... > Getting to Know the Major Investment... - Pg. 109

The Name Game--Understanding the Different Types of Mutual Funds 109 And then we have this hybrid category called asset allocation or balanced . We don't consider this category to be a true asset class or investment category, because it is nothing more than a mixture of the other categories. If you put a Rolls Royce grill on a Volkswagen body and power it with a truck engine, you still have a motor vehicle. It may look strange, it may sound strange, but it still gets you from here to there. We'll talk more about balanced funds later on in this chapter. Cash Equivalent Investments Money market funds, cash reserve funds, short-term Treasuries like T-bills, repurchase agreements, and other short-term investments (investments that mature in less than three years) are the most common "cash equivalent" investments you'll find in 401(k) plans (see Appendix C, "Glossary," for definitions). As safety-oriented investments, they should only be used to make up the "cash" or safety portion of a diversified portfolio, park money that is waiting to be invested, or emergency funds. Most cash equivalent investments maintain a constant share price of $1.00. While this $1.00 share price is not guaranteed, money managers will do everything humanly possible to make sure the constant share price stays constant. After all, if the share price bounced around the investment could not be categorized as safe. The long-term average return you can expect from cash equivalents is about 3 to 6 percent per year. Terms to Know