Mutual Fund

What does it mean?
A security that gives small investors access to a well diversified portfolio of equities, bonds, and other securities. Each shareholder participates in the gain or loss of the fund. Shares are issued and can be redeemed as needed. The fund's net asset value (NAV) is determined each day. Each mutual fund portfolio is invested to match the objective stated in the prospectus.

In Other Words...
It has been shown in study after study that a majority of mutual funds fail to beat the market. Also, picking mutual funds purely on the basis of past performance usually does not work.

Related Links
Mutual Fund Basics Tutorial - Learn about the basics--and the pitfalls!--of investing in mutual funds.

The Truth Behind Mutual Fund Returns - Fund returns can be skewed dramatically by survivorship bias. Learn more so you won't be misled.

Related Terms
Asset allocation Fund | Back End Load | Balanced Fund | Closed End Mutual Fund | Front End Load | Net Asset Value (NAV) | No-Load Fund | Open-End Fund | Portfolio | Prospectus

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