Definition
Type of investment in which investors pool their money together to buy a collection (a portfolio) of stocks and bonds above
- Usually actively managed by professional fund managers
- They decide how to invest the money (because they are actively managed, higher fees)
- Made out of specific investments, like large cap stocks
- Mutual fund investors don’t actually own any of the underlying investments purchased by the mutual fund company, but all of the investors equally share any gains or losses earned by the fund
- Can only be sold once per day (closes at 4 pm ET)
- If you enter a trade to buy or sell shares of a mutual fund, your trade will be executed at the next available price (net asset value (NAV)), calculated each day after the market closes