A mutual fund is a type of investment vehicle that pools money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities. The fund is managed by professional money managers who allocate the money to various investments with the goal of achieving the fund’s investment objectives.
Investors buy shares in the mutual fund, and the value of those shares is based on the value of the underlying securities held by the fund. Mutual funds are a popular investment option for individuals because they offer diversification, professional management, and easy access to a variety of investment options.
Mutual funds can be open-ended or closed-ended. Open-ended funds can issue or redeem shares at any time, while closed-ended funds issue a fixed number of shares that can only be bought or sold on a stock exchange. Mutual funds can also be categorized by the type of investments they hold, such as stocks, bonds, or a combination of both.