A mutual fund is a company that brings together money from many individuals and invests it in bonds, stocks, or other assets. The total holdings of stocks, bonds or other assets the fund owns are known as its portfolio. Each investor in the fund owns shares, which represent a part of these holdings.
A mutual fund manager is responsible for investing the pooled money into specific assets. Pooling money together in a mutual fund allows investors to buy stocks, bonds or other assets at a lower trading cost than doing it on their own. It also allows them to diversify into a variety of assets.
The Securities and Exchange Commission offers the publication "Invest Wisely: An Introduction to Mutual Funds" to educate the public on how mutual funds work, what factors to consider before investing, and how to avoid common pitfalls.
- ↑ Glossary: Mutual Funds. HSBC.
- ↑ "Invest Wisely: An Introduction to Mutual Funds". Securities and Exchange Commission.