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A mutual fund is an investment vehicle that pools money from multiple investors to buy a diversified portfolio of stocks, bonds, or other securities. It is managed by professional fund managers, who make decisions about how to allocate the fund’s assets based on the fund’s objective (e.g., growth, income, or balance).
Investors buy shares in the fund, and the value of those shares changes based on the performance of the underlying investments. Mutual funds offer diversification, which helps spread risk, and they provide a way for individual investors to access a broad range of investments with relatively low minimums.
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