Overview Of Mutual Funds

Mutual fund is a common pool of money collected from investors and invested behalf of investors in marketable securities. Thus, generated returns would be passed back to investors.

Mutual fund companies raise money from investors to invest in stocks, bonds and other securities. It is a package made up of several individual investments. When those investments gain or lose value, the investor gain or lose as well. When they pay dividends, investors get income. Mutual funds also offer professional management and diversification.

Mutual funds may be open-end or closed-end funds. The term "mutual funds" is used most often to mean open-end funds. Open-end funds issue new shares continuously as investors buy them. Investors redeem their shares directly from the fund. Closed-end funds issue a fixed number of shares that the fund may redeem only upon termination of the fund's trust.
Shareholders in a close-end fund may, however, sell their shares through a broker on the secondary market to other investors.

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