What is a Mutual Fund?

A mutual fund is an investment portfolio operated by an investment company that raises money from shareholders and invests in a group of assets with a particular investment objective in mind. Common assets in a mutual fund include stocks, bonds and money market instruments. In return for the money given to the fund when purchasing shares, shareholders receive an equity position in the fund and each of its underlying securities. For most mutual funds, shareholders are free to sell their shares at any time, although the price of a mutual fund share will fluctuate daily, depending upon the performance of the securities held in the fund's portfolio. The primary benefits of mutual funds are diversification and professional money management. Mutual funds offer variety, liquidity, and convenience, but come with fees that can be hefty and a minimum investment requirement typically.


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