Mutual fund
A mutual fund pools money from many investors to buy a portfolio chosen by a manager. Shares are bought and sold once a day at the fund's net asset value.
Actively managed mutual funds try to beat the market and usually charge more than index funds or ETFs.
Related terms
- ETF (exchange-traded fund): An ETF is a fund that holds a basket of investments, such as all the stocks in an index, and trades on an exchange like a single stock.
- Index fund: An index fund is a fund that buys every stock in a market index, such as the S&P 500, in the same proportions, so it matches the market's return instead of trying to beat it.
- Expense ratio: The expense ratio is the yearly fee a fund charges, as a percentage of the money you have in it.
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