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A fund is a pooled investment vehicle that collects capital from multiple investors to invest in a diversified portfolio of assets, including stocks, bonds, commodities, or real estate. Funds are managed by professional portfolio managers who make investment decisions on behalf of the investors. Common types of funds include mutual funds, exchange-traded funds (ETFs), hedge funds, and pension funds, each with specific investment strategies, risk profiles, and fee structures.
An investor buys shares in a mutual fund that invests in a diversified mix of large-cap U.S. stocks, gaining exposure to multiple companies without buying individual shares directly.
• Pooled investment vehicle managed by professional portfolio managers.
• Invests in diversified portfolios across various asset classes.
• Includes mutual funds, ETFs, hedge funds, and pension funds.
Funds offer diversification, professional management, and access to a broad range of assets, reducing risk compared to individual stock investments.
Mutual funds are actively managed and traded at net asset value, while ETFs are passively managed, trade like stocks, and generally have lower fees.
Risks include market risk, management risk, and fees, which can impact overall returns depending on the fund’s strategy and performance.
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