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See my edit. What protects you from the fund being mismanaged?

US money market funds fall under strict regulations (including around liquidity and redemption) post global financial crisis to preserve their net asset value at $1 (to prevent “breaking the buck” or losing value). Can you be more specific as to what mismanagement looks like?

https://www.sipc.org/for-investors/what-sipc-protects

https://investor.vanguard.com/investor-resources-education/m...

Depends on the money market fund. There are US treasury only funds like FDLXX, basically the only situation it would become unable to meet it's cash flow obligations is if there where no buyers for US treasuries at face value.

And frankly if that's the case I wouldn't be betting on FDIC or equivalent insurance actually working anyways.

But even "less" secure ones are heavily regulated to be kept at 1$ of NAV and SPIC backed.

Just buy the short term T-bills directly and hold them. They're as liquid and you don't have to worry about any risk besides US government default. Why pay a fund even 5 basis points simply to build a ladder that you can build yourself?

> Why pay a fund even 5 basis points simply to build a ladder that you can build yourself?

Convenience is easily worth it.

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