What Is a Mutual Fund?

A mutual fund is a type of financial vehicle made up of a pool of money collected from many investors to invest in securities like stocks, bonds, money market instruments, and other assets. Mutual funds are operated by professional money managers, who allocate the fund's assets and attempt to produce capital gains or income for the fund's investors. 
Advantages of mutual funds:
Increased diversification: A fund diversifies holding many securities. This diversification decreases risk.

Professional investment
management: Open-and closed-end funds hire portfolio managers to supervise the fund's investments.

Service and convenience: Funds often provide services such as check writing.

Government oversight: Mutual funds are regulated by a governmental body.

Transparency and ease of comparison: All mutual funds are required to report the same information to investors, which makes them easier to compare to each other.

Lower cost: The cost of a single investor to buy a stock or a bond is lower than investing individually.

Flexibility: Mutual funds enables changes portfolio with market conditions change.

Disadvantages of mutual funds:
Fees charged by Fund management company

Less control over timing of recognition of gains

Less predictable income

No opportunity to customize

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