Mutual Funds


A mutual fund is a professionally managed type of collective investment of saving, that pools money from many investors and invests typically in investment securities (stocks, bonds, short-term money market instruments, other mutual funds, other securities, and/or commodities such as precious metals).

Mutual funds have become extremely popular over the last twenty years. There are many types of mutual funds. You can classify funds based on asset class, investing strategy, region, etc. The advantages are professional management, diversification, economies of scale, simplicity and liquidity. The disadvantages are costs, possible tax consequences and the possibility that the management doesn’t ensure an excess return.