A mutual fund is...

A mutual fund is a form of collective investments that pools money from many investors and invests it in bonds, stocks, short-term money market instruments, and other securities. In a mutual fund, the fund manager, who is also known as the portfolio manager, trades the fund*s underlying securities, realizing capital gains or losses, and collects the dividend. The investment proceeds are then passed along to the individual investors. The value of a share of the mutual fund, known as the net asset value per share, is calculated daily based on the total value of the fund divided by the number of shares currently issued and outstanding.

Legally, known as an open-end company under the Investment Company Act of 1940, a mutual fund is one of three basic types of investment companies available in the United States. Outside of the United States, mutual fund may be used as a generic term for various types of collective investment vehicle. In the United Kingdom and western Europe (including offshore jurisdictions), other forms of collective investment vehicle are prevalent, including unit trusts, open-ended investment companies, and unitized insurance funds. In New Zealand and Australia the term mutual fund is generally - not used (managed fund).


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