Mutual Fund
A Mutual Fund is a Collective Investment Scheme that pools money from many investors to purchase securities.
- Context:
- It can (typically) be for Small Investor.
- It can have a Mutual Fund Fee.
- It can be managed by a Mutual Fund Manager.
- Example(s):
- Counter-Example(s)
- a Hedge Fund.
- See: Security (Finance), Target Date Fund, 401(k) Plan.
References
2014
- (Wikipedia, 2014) ⇒ http://en.wikipedia.org/wiki/mutual_fund Retrieved:2014-7-13.
- A mutual fund is a type of professionally managed collective investment scheme that pools money from many investors to purchase securities. While there is no legal definition of the term "mutual fund", it is most commonly applied only to those collective investment vehicles that are regulated and sold to the general public. They are sometimes referred to as "investment companies" or "registered investment companies".[1] Most mutual funds are "open-ended", meaning stockholders can buy or sell shares of the fund at any time by redeeming them from the fund itself, rather than on an exchange.[2] Hedge funds are not considered a type of mutual fund, primarily because they are not sold publicly. [3]
In the United States, mutual funds must be registered with the Securities and Exchange Commission, overseen by a board of directors (or board of trustees if organized as a trust rather than a corporation or partnership) and managed by a registered investment adviser. Mutual funds, like other registered investment companies, are also subject to an extensive and detailed regulatory regime set forth in the Investment Company Act of 1940. Mutual funds are not taxed on their income and profits if they comply with certain requirements under the U.S. Internal Revenue Code.
Mutual funds have both advantages and disadvantages compared to direct investing in individual securities. They have a long history in the United States. Today they play an important role in household finances, most notably in retirement planning.
There are 3 types of U.S. mutual funds: open-end, unit investment trust, and closed-end. The most common type, the open-end fund, must be willing to buy back shares from investors every business day. Exchange-traded funds (or "ETFs" for short) are open-end funds or unit investment trusts that trade on an exchange. Open-end funds are most common, but exchange-traded funds have been gaining in popularity.
Mutual funds are generally classified by their principal investments. The four main categories of funds are money market funds, bond or fixed income funds, stock or equity funds and hybrid funds. Funds may also be categorized as index or actively managed.
Investors in a mutual fund pay the fund’s expenses, which reduce the fund's returns/performance. There is controversy about the level of these expenses. A single mutual fund may give investors a choice of different combinations of expenses (which may include sales commissions or loads) by offering several different types of share classes.
- A mutual fund is a type of professionally managed collective investment scheme that pools money from many investors to purchase securities. While there is no legal definition of the term "mutual fund", it is most commonly applied only to those collective investment vehicles that are regulated and sold to the general public. They are sometimes referred to as "investment companies" or "registered investment companies".[1] Most mutual funds are "open-ended", meaning stockholders can buy or sell shares of the fund at any time by redeeming them from the fund itself, rather than on an exchange.[2] Hedge funds are not considered a type of mutual fund, primarily because they are not sold publicly. [3]
- ↑ Lemke, Lins and Smith, Regulation of Investment Companies (Matthew Bender, 2014 ed).
- ↑ Lemke, Lins and Smith, Regulation of Investment Companies (Matthew Bender, 2014 ed.).
- ↑ Lemke, Lins, Hoenig and Rube, Hedge Funds and Other Private Funds: Regulation and Compliance (Thomson West, 2014-2015 ed.).
2013
- http://www.investopedia.com/terms/m/mutualfund.asp
- QUOTE: An investment vehicle that is 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 similar assets. Mutual funds are operated by money managers, who invest the fund's capital 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. …
… One of the main advantages of mutual funds is that they give small investors access to professionally managed, diversified portfolios of equities, bonds and other securities, which would be quite difficult (if not impossible) to create with a small amount of capital. Each shareholder participates proportionally in the gain or loss of the fund. Mutual fund units, or shares, are issued and can typically be purchased or redeemed as needed at the fund's current net asset value (NAV) per share, which is sometimes expressed as NAVPS.
- QUOTE: An investment vehicle that is 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 similar assets. Mutual funds are operated by money managers, who invest the fund's capital 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. …