Mutual Fund

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DEFINITION of 'Mutual Fund'

An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by money managers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus.

INVESTOPEDIA EXPLAINS 'Mutual Fund'

One of the main advantages of mutual funds is that they give small investors access to professionally managed, diversified portfolios of equities, bonds and other securities, which would be quite difficult (if not impossible) to create with a small amount of capital. Each shareholder participates proportionally in the gain or loss of the fund. Mutual fund units, or shares, are issued and can typically be purchased or redeemed as needed at the fund's current net asset value (NAV) per share, which is sometimes expressed as NAVPS.

Are you interested in Mutual Funds? Check out How To Pick A Good Mutual Fund and our Mutual Funds Tutorial for more information!

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    A number of factors determine when an expense ratio is relatively high or low, but a good, low expense ratio is generally ... Read Full Answer >>
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    A mutual fund's expense ratio is very important to investors because fund operating and management fees can have a large ... Read Full Answer >>
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  6. How often should I be checking the NAV of my mutual fund shares?

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  7. What is the difference between a REIT and a real estate fund?

    Both real estate funds and real estate investment trusts (REITs) are used when diversifying a long-term investment portfolio. ... Read Full Answer >>
  8. What are typical trust fund management fees?

    The asset management fee is a straightforward fee charged on a trust fund. It is expressed as a fixed percentage of the total ... Read Full Answer >>
  9. What was the first mutual fund?

    Although it is uncertain, many trace the creation of the first mutual fund back to Dutch merchant Adriaan Van Ketwich. In ... Read Full Answer >>
  10. When did mutual funds come to the U.S.A.?

    On March 21,1924, the Massachusetts Investors Trust was incorporated, marking the birth of the American mutual fund industry. ... Read Full Answer >>
  11. How do I find mutual funds that track indexes?

    The two best sources for finding index funds are Fidelity Investments and Vanguard.Of the 57 index funds in investment research ... Read Full Answer >>
  12. Is it possible to buy mutual funds using a margin account?

    Because of the pricing/trading mechanisms used with mutual funds, they cannot be bought and sold like stocks. When trading ... Read Full Answer >>
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