Business and Personal Finance Dictionary

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• MUTUAL FUND
  
  A mutual fund is a professionally managed investment that pools the capital of thousands of investors to trade in stocks, bonds, options, futures, currencies, or money market securities, depending on the investment objectives of the fund. The fund will also buy back any shares an investor wishes to redeem, or sell back. Funds may vary from very aggressive and volatile, such as those specializing in the markets of developing countries, to conservative, such as those that buy only investment-grade bonds or blue chip stock. Because most mutual funds hold a large number of securities, they offer investors the opportunity to diversify, as well as the benefits of portfolio management. Load funds-those that charge sales fees-are sold through brokers or other financial advisors. No-load funds, which don't charge sales fees (but may pass on other marketing expenses to shareholders through 12b-1 fees) are sold directly to investors. All mutual funds charge management fees, though at different rates, and they may also levy other fees and charges. Details of a fund's objective, management, and expenses are spelled out in its prospectus. A fundamental analysis might indicate whether the stock is likely to increase or decrease in value in the short- and long-term, and whether its current price is an accurate reflection of its value.
  
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