Mutual Fund
A mutual fund is an investment vehicle made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments, and other assets. Mutual funds are operated by professional money managers, who allocate the fund’s assets and attempt to produce capital gains and income for the fund’s investors. A mutual fund’s portfolio is structured and maintained to match the investment objectives stated in its prospectus.
History of Mutual Funds
The concept of mutual funds dates back to the 18th century in the Netherlands. The first mutual fund was established in 1774 by Dutch merchant Adriaan van Ketwich. The fund, called “Eendragt Maakt Magt” (“Unity Creates Strength”), was designed to allow investors to pool their money and invest in a variety of securities. The fund was a success and soon other funds were established in Europe. In the United States, the first mutual fund was established in 1893 by Boston banker Charles H. Dow.
Table of Comparisons
| Mutual Fund | Stocks | Bonds |
|---|---|---|
| Diversified portfolio | High risk/reward | Low risk/reward |
| Managed by professionals | High volatility | Low volatility |
| Low cost | High liquidity | Low liquidity |
Summary
Mutual funds are a popular investment vehicle for investors who want to diversify their portfolios and have their money managed by professionals. Mutual funds offer a diversified portfolio, low cost, and are managed by professionals. For more information about mutual funds, investors can visit websites such as Investopedia, The Motley Fool, and Morningstar.
See Also
- Exchange-Traded Funds (ETFs)
- Index Funds
- Money Market Funds
- Hedge Funds
- Closed-End Funds
- Real Estate Investment Trusts (REITs)
- Unit Investment Trusts (UITs)
- Variable Annuities
- Separately Managed Accounts (SMAs)
- Commodity Funds
