Mutual Fund

A mutual fund is an investment vehicle that pools money from multiple investors to buy a diversified portfolio of stocks, bonds, or other securities. Managed by professional fund managers, mutual funds offer investors the ability to access diversified investments without having to manage individual assets themselves. Mutual funds are classified based on their investment strategy, such as equity, bond, or money market funds, and charge management fees for their services.

Example

An investor buys shares in an equity mutual fund that focuses on large-cap U.S. companies, gaining exposure to a diversified portfolio of stocks.