Mutual funds pool their shareholders’ capital to invest in securities, including bonds, equities, money market instruments, and other resources. Mutual funds are managed by qualified money managers who distribute the assets in an effort to bring in profits or income for the fund’s investors. A mutual fund’s portfolio is constructed and maintained in accordance with the stated investment objectives in the prospectus.
Through mutual funds, small or individual investors can access professionally run portfolios of bonds, stocks, and other instruments. As a result, the fund’s profits or losses are distributed proportionately to each shareholder. Mutual fund success is normally measured by changes in the fund’s total market capitalization, determined by the effectiveness of its underlying assets. A huge range of assets is invested in by mutual funds.
The majority of mutual funds are owned by larger financial organizations like Vanguard, T. Rowe Price, Fidelity Investments, and Oppenheimer. A mutual fund’s fund manager, also referred to as the investment adviser, is obligated by law to operate in the shareholders’ best interests.