What type of institution sells shares to purchase assets and is included in the M2 definition of money?

Money market funds are a type of financial institution that sells shares to investors in order to pool those funds and purchase a diversified portfolio of short-term, high-quality investments, such as treasury bills, commercial paper, and other money market instruments. This structure allows investors to earn a return on their money while still providing liquidity, as shares in money market funds can typically be redeemed quickly.

Included in the M2 definition of money, money market funds represent a component of the broader money supply. M2 includes not only cash and checking deposits (M1) but also savings accounts, small time deposits, and retail money market funds. This inclusion signifies the role of such funds in the economy, as they serve as a near-cash asset that individuals can easily access if needed, while also offering a higher yield compared to regular savings accounts.

The other types of institutions mentioned do not fit this specific description as they do not sell shares to purchase short-term assets in a way that is included in the M2 money supply. For instance, investment banks primarily engage in underwriting and assisting with capital raising, insurance companies focus on risk management through policy sales rather than direct investment in short-term products, and credit unions are cooperative financial institutions that provide loans and deposits to their members