An Overview of Mutual Funds

What is a mutual fund?

A mutual fund is a financial vehicle that pools together money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities. Managed by a professional portfolio manager, mutual funds offer investors access to a broad range of assets, which individual investors might find difficult or expensive to buy on their own.
Key Takeaways:
  • Diversification: Investing in a mutual fund allows for diversification of assets, reducing the risk associated with individual stocks or bonds.
  • Professional Management: A portfolio manager actively manages the pooled funds, making buy and sell decisions based on extensive research.
  • Liquidity: Mutual fund shares can be easily redeemed, offering high liquidity to investors.

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