What is a Mutual Fund?

A mutual fund is a pooled investment fund which pools funds from multiple investors into one investment. Mutual funds can be either institutional or retail in nature. The funds are usually traded on major exchanges such as the New York Stock Exchange (NYSE) and the NASDAQ. It is important to note that a mutual fund does not trade shares, but instead, issues stock certificates (which represent ownership in the fund).

Mutual funds can be managed by a single person, or by a number of people, called portfolio managers. Managers control and manage the assets during investment hours. When an investor wishes to sell their securities, they must first sell all of the securities in the portfolio and then pick new ones to add to the portfolio. This is where a managed investment fund comes in. The managed funds may offer lower costs than some other forms of investment funds, but the advantages of using a managed fund outweighs the disadvantages.

There are certain advantages to investing through managed funds. The manager will do all of the research into the security which means that you as the investor have only the up-to-date price information to make your buying decisions. The portfolio manager will buy securities at the proper time, which means that you don’t have to guess at when to buy, and you don’t have to rely on the advice of someone who isn’t educated in the buying and selling of securities as well as the research that may be done. The managed fund can also offer flexibility and cost savings. The main disadvantage is that when you lose money you may not know about it until you receive your checks, and if you happen to need to liquidate some of your investments early, liquidation is often very expensive and time consuming.