Definition of Mutual Fund

A "mutual fund" is an investment pool managed by a professional investment company. A mutual fund raises money by selling its shares to the public and then invests in a group of securities, such as stocks, bonds and money market investments. Mutual funds can impose a sales charge, or "load" on investors when they buy or sell shares, although there are also some funds that are "no load" and impose no sales charge. For most mutual funds, shareholders are free to sell their shares at any time, although the value of a share will fluctuate with the value of the underlying assets of the fund. Mutual funds provide the benefits of diversification, liquidity and professional money management. There are quite a variety of mutual funds pegged to asset class and risk, e.g., bond fund, aggressive growth fund, global fund, municipal bond fund, money market fund, technology fund, and others.