The
Definition Of

Mutual Fund

Mutual Fund is the investment that companies attract from the public and reinvest them in a pool of stocks, bonds, and other financial instruments, with each saver receiving a share of the earnings generated by the pool of financial instruments.

The fund is the financial intermediary that pools funds from investors by selling shares of itself and uses the funds to purchase securities.

Mutual Fund is a financial carrier that involves accumulating investments in the shares of much different joint-stock (or publicly traded) companies in order to reduce the risk and overhead costs associated with investing in corporate shares. 

An investor buys a unit in one of these funds and receives a pro-rated portion of the fund’s total income (including both dividends and capital gains).

It is a fund formed by a group of individual investors, who pool their money to invest in securities and is usually handled by a professional investment manager.

Types of Mutual Funds

There are mainly six types of Mutual Funds. They are listed below -

  1. Money Market Funds
  2. Fixed Income Funds
  3. Equity Funds
  4. Balanced Funds
  5. Index Funds
  6. Specialty Funds

 

Use of the Term in Sentences

  • Mutual Funds run by banks are among the most trusted ones to the people.
  • Parents often invest in mutual funds to gather funds for their kids’ future.

 

Category: Economics
References