Mutual Fund

A mutual fund is a type of professionally-managed collective investment vehicle that pools money from many investors to purchase securities. While there is no legal definition of mutual fund, the term is most commonly applied only to those collective investment vehicles that are regulated, available to the general public and open-ended in nature. Hedge funds are not considered a type of mutual fund.

The term mutual fund is less widely used outside of the United States and Canada. For collective investment vehicles outside of the United States, see articles on specific types of funds including open-ended investment companies, SICAVs, unitized insurance funds, unit trusts and Undertakings for Collective Investment in Transferable Securities.

In the United States, mutual funds must be registered with the Securities and Exchange Commission, overseen by a board of directors or board of trustees and managed by a registered investment advisor. They are not taxed on their income if they comply with certain requirements.

Mutual funds have both advantages and disadvantages compared to direct investing in individual securities. They have a long history in the United States. Today they play an important role in household finances.

There are 3 types of U.S. mutual funds: open-end, unit investment trust, and closed-end. The most common type, the open-end mutual fund, must be willing to buy back its shares from its investors at the end of every business day. Exchange-traded funds are open-end funds or unit investment trusts that trade on an exchange. Open-end funds are most common, but exchange-traded funds have been gaining in popularity.

Mutual funds are classified by their principal investments. The four largest categories of funds are money market funds, bond or fixed income funds, stock or equity funds and hybrid funds. Funds may also be categorized as index or actively-managed.

Investors in a mutual fund pay the fund’s expenses. There is controversy about the level of these expenses. A single mutual fund may give investors a choice of different combinations of expenses by offering several different types of share classes.

Read more about Mutual Fund:  Structure, History, Leading Complexes, Types, Investments and Classification, Expenses, Share Classes

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Hedge Funds - Performance - Effect of 2007/08 Financial Crisis
... Hedge funds posted disappointing returns in 2008, but the average hedge fund return of -18.65% (the HFRI Fund Weighted Composite Index return) was far better than the returns ... posting losses significantly worse than the average hedge fund ... Mutual funds also performed much worse than hedge funds in 2008 ...
Separately Managed Account - Description and History
... this context, an SMA can be thought of as an investment vehicle similar to a mutual fund, in which the customer pays a fee to a money manager for its services managing the customer's investment ... The important difference is that a mutual fund investor owns shares of a company that in turn owns other investments, whereas an SMA investor owns the invested assets directly in his own name ... who needed to meet specific objectives that did not fit within the constrictions of a mutual fund investment ...
Mutual Fund - Definitions - Turnover
... Turnover is a measure of the volume of a fund's securities trading ... Turnover equals the lesser of a fund's purchases or sales during a given period (of no more than a year) divided by average net assets ...
Henry B. R. Brown - Inventing The Money Market Fund
... Banks in the United States were able to gather substantial funds that they were able to lend out with interest without paying any returns on the funds they had ... around their office in August 1969 and brainstorming, Bent suggested that a mutual fund could be created that would allow small investors to combine their resources and gain access to the higher yields ... Neither of them knew anything about the intricacies and legalities of opening a mutual fund, but research by Brown confirmed that the type of money market mutual fund ...
Burkenroad Reports - Mutual Fund
... The Burkenroad Mutual Fund (HHBUX is the ticker symbol for the load fund and HYBUX is the ticker symbol for the no-load fund), is managed by Hancock Bank ... the Burkenroad Reports as well as other sources, and the fund is primarily composed of stocks followed by the Burkenroad program ... Since inception (12/31/01) the fund has outperformed about 94% of domestic equity mutual funds and has significantly outpaced both the Russell 2000 and S P 500 indexes, although ...

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