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What Is A Mutual Fund?

Views 13372022.03.02

Key takeaways

  • A mutual fund is a collective investment that pools money from many investors.

  • A mutual fund is a smart and easy way to diversify your investment.

  • Mutual funds provide individual investors access to professionally managed portfolios.

Understanding mutual funds

A mutual fund is a common investment vehicle as well as an asset. A mutual fund pools money from you and other investors and invests in various types of assets, such as stocks, bonds, market money instruments, etc.

Buying a share in a mutual fund can get the same mix of investments, instead of holding a single stock. For individual investors, it provides an easy and cost-effective way to diversify your investments. It's a smart way of putting eggs in multiple baskets.

Mutual funds usually are actively managed by professional fund managers, acting in the best interests of investors. For someone with limited time to invest, a mutual fund gives access to professionally managed portfolios.

The investment strategies, objectives, and managers, risks, fees, and expenses of mutual funds, will all be disclosed in the prospectus of each fund.

Example

Suppose you believe Amazon will have great potential during the post-pandemic period as consumers are accelerating their shift to online shopping. You want to buy some Amazon shares to enjoy the benefits of its future growth.

You get only $2,000 for investment, but Amazon's stock closed at $3,469.15 per share on September 10, 2021. In this case, a mutual fund with exposure to Amazon would be an alternative.

How to locate: AMZN Quotes - Summary - Related Fund.

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The content in this article is intended for general circulation and informational purposes only. It does not take into account the investment objectives, financial situation or needs of any particular person and should not be relied on as advice or recommendation. Information provided in this article are not specifically intended for or specially targeted at the public in any specific jurisdiction. Neither Moomoo Inc. nor its affiliates are licensed Financial Advisers and do not provide financial advice. You are advised to consult your financial adviser before making any commitment to invest in any capital markets product. The information published is not and does not constitute or form part of any offer, invitation or solicitation to subscribe or to enter into any transaction in capital markets products. Moomoo is a professional trading app offered by Moomoo Inc. In the U.S., investment products and services on Moomoo are offered by Futu Inc., Member FINRA/SIPC. In Singapore investment products and services are offered through Futu Singapore Pte. Ltd., regulated by the Monetary Authority of Singapore (MAS). This advertisement has not been reviewed by the MAS. Moomoo Inc., Futu Inc. and Futu Singapore Pte. Ltd are affiliated companies. Any illustrations, scenarios, or specific securities referenced herein are strictly for illustrative purposes. Past investment performance does not guarantee future results. Investing involves risk and the potential to lose principal.

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