What Is a Mutual Fund?
A mutual fund is a financial vehicle that pools assets from shareholders 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.
Advantages of Mutual Funds
There are many reasons why investors choose to invest in mutual funds with such frequency. Let’s break down the details of a few.
Advanced Portfolio Management
When you buy a mutual fund, you pay a management fee as part of your expense ratio, which is used to hire a professional portfolio manager who buys and sells stocks, bonds, etc.
This is a relatively small price to pay for getting professional help in the management of an investment portfolio.
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Insurance and investment advisory by Manish Busa.