A financial vehicle (investment fund) that pools contributions from many- or large number of- investors for the purpose of investing the pooled funds in multiple asset classes including securities (stocks), bonds, money market instruments, etc. A mutual fund is run and managed by professional investment managers who apply their expertise in order to fulfill the value proposition of this method of investing: generation of higher amounts of profit (as compared to other investing venues such as investment accounts offered by banks and financial institutions).
Investing through mutual funds open up better opportunities in terms of selecting high-performing investments and timely adjustment of a fund’s component investments in accordance with changes in the broader market, and ability to reduce the overall risk of these investments.
Depending on concentration, mutual funds may come in many forms including money market funds, value funds, growth funds, index funds, sector funds, and international funds. Other types may also include open-end mutual funds, closed-end mutual funds, flexi-cap mutual funds, and multi-cap mutual funds.
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