A mutual fund is an investment portfolio that is made up of a pool of fund from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments like foreign exchange and similar intangible assets. There are some mutual funds which also cater to tangible assets like property but they are less common. Money managers generally operate Mutual funds, they then invest the fund’s capital and try to produce capital gains and income for the fund’s individual investors. The portfolio of a Mutual fund is ordered and maintained to secure the investment objectives stated in its specific prospectus. This allows Mutual fund investors to seek out funds specifically focused on sectors where the investor has an inherent interest.

The main benefits of mutual funds is that they give regular investors access to the professionally managed and diversified portfolios of bonds, equities and other specific securities, which would be quite complicated to piece together with such a small amount of capital and initial investment. Each shareholder participates proportionally in the benefits or losses of the whole fund. Mutual fund can be acquired in units, shares or percentages of the whole fund that has been issued and can typically be bought or redeemed as required at the fund’s current asset value per unit or share owned, which is sometimes expressed as a financial amount, currency or percentage of the whole.