Mutual fund

 


A mutual fund is a collection of different types of investments. Investors in the fund do not directly own the stocks and bonds that make up the fund, they instead own shares in the fund as a whole. The diversified portfolio of the fund reduces the risk on investment.

Types of mutual fund management

Active: A professional management team of fund managers is employed to manage the fund.

Passive: Mutual funds are automatically invested in correlation with major indices.

Types of mutual funds

  • Equity funds: invest in stocks
  • Bond funds: invest in bonds
  • Money market: invest in short-term debt, Treasury bills and contracts for difference
The price per share of a mutual fund is known as Net Asset Value (NAV) per share. NAV is calculated daily based on the closing prices of all the holdings. Mutual funds have a minimum initial investment requirement. 

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