As some investors turn to banks for better returns than on money market funds, some mutual fund companies are trying to outdo them with enhanced-cash money funds, The Wall Street Journal reports. These funds invest in longer-term, lower credit instruments, whereas traditional money market funds invest in short-term Treasuries and commercial paper.

Enhanced-cash funds offer returns of as much as 1% higher than regular money market funds, which currently sport a yield of 3.38%. To further entice investors, some also offer check-cashing services and lower fees than on money market funds. The Reserve Funds just launched an enhanced-cash fund, the Reserve Yield Plus Fund, with a mere two-basis-point fee. It is currently delivering a yield of 4.32%.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.