Definition of Mutual fund:
A mutual fund is a type of financial vehicle made up of a pool of money collected from many investors to invest in securities like stocks, bonds, money market instruments, and other assets. Mutual funds are operated by professional money managers, who allocate the fund's assets and attempt to produce capital gains or income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus.
Mutual funds give small or individual investors access to professionally managed portfolios of equities, bonds, and other securities. Each shareholder, therefore, participates proportionally in the gains or losses of the fund. Mutual funds invest in a vast number of securities, and performance is usually tracked as the change in the total market cap of the fund—derived by the aggregating performance of the underlying investments.
An investment vehicle managed by finance professionals that raises capital by selling shares (called units) in a chosen and balanced set of securities to the public.
A mutual funds capital is invested in a group (portfolio) of corporate securities, commodities, options, etc., that match the funds objectives detailed in its prospectus. The level of a mutual funds income from its portfolio determines the daily market value (called net asset value) at which its units are redeemable on any business day, and the dividend paid to its unit holders. Mutual funds are of two main types: (1) open end fund, where the capitalization of the fund is not fixed and more units may be sold at any time to increase its capital base, (2) closed end fund, where capitalization is fixed and limited to the number of units authorized at the funds inception (or as formally altered thereafter). Mutual funds usually charge a management fee (typically between 1 and 2 percent of the funds annual earnings) and may also levy other fees and sales commission (called load) if units are bought from a financial advisor. The term mutual fund, used mainly in the US, has no legal bearing, and may be referred to as unit investment trust or a unit trust in the UK and other British Commonwealth countries.
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An investment program funded by shareholders that trades in diversified holdings and is professionally managed.
How to use Mutual fund in a sentence?
- She didnt want to invest in any in particular stock, so she invested in a broad index mutual fund to lower her risk.
- When researching investment options for his retirement savings, Jeff decided that mutual fund s with a mix of stocks and bonds would be the best choice for his personal goals.
- The economics students prepared for their lessons on mutual fund s by researching corporate security and portfolio options to determine the daily market value.
- A mutual fund is a type of investment vehicle consisting of a portfolio of stocks, bonds, or other securities. .
- The agency is already battling court challenges to its rules on hedge funds and mutual funds.
- Mutual funds are divided into several kinds of categories, representing the kinds of securities they invest in, their investment objectives, and the type of returns they seek.
- The overwhelming majority of money in employer-sponsored retirement plans goes into mutual funds.
- Mutual funds give small or individual investors access to diversified, professionally managed portfolios at a low price.
- Mutual funds charge annual fees (called expense ratios) and, in some cases, commissions, which can affect their overall returns.
Meaning of Mutual fund & Mutual fund Definition