Mutual Fund

A mutual fund is an investment vehicle that pools money from multiple investors to buy a diversified portfolio of stocks, bonds, or other securities. Managed by professional fund managers, mutual funds offer investors the ability to access diversified investments without having to manage individual assets themselves. Mutual funds are classified based on their investment strategy, such as equity, bond, or money market funds, and charge management fees for their services.

Example:

An investor buys shares in an equity mutual fund that focuses on large-cap U.S. companies, gaining exposure to a diversified portfolio of stocks.

Key points

• An investment vehicle that pools money from multiple investors to buy a diversified portfolio of securities.

• Managed by professional fund managers, offering access to diversified investments.

• Mutual funds charge management fees and are classified based on their investment strategy.

Quick Answers to Curious Questions

What is a mutual fund?

A mutual fund pools money from multiple investors to buy a diversified portfolio of securities, managed by professionals.

How do investors benefit from mutual funds?

Investors benefit from diversification and professional management without needing to manage individual assets.

What types of mutual funds are available?

Mutual funds are classified based on their strategy, including equity funds, bond funds, and money market funds.