Mutual Fund

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What is a Mutual Fund? Meaning.

A Mutual Fund is an investment company that pools money from investors and invests it a portfolio of securities. Such a portfolio may contain:

• Stocks (Stock Fund).

• Bonds (Bond Fund).

• Money-market instruments (Money Market Fund).

• A combination of stocks and bonds (Hybrid Fund).

Typically, in return for an initial shareholder fee plus annual operating expenses, the portfolio manager trades the fund's underlying securities, realizing a gain or loss, and collects the dividends and interest income. The investment proceeds are then passed along to the individual investors. There are more mutual funds than there are individual stocks..

In the USA, mutual funds have a special legal status, in Western Europe it is a more generic term for various types of collective investments.

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