mutual fund

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mutual fund,

in finance, investment company or trust that has a very fluid capital stock. It is unique in that at any time it can sell or redeem any of its outstanding shares at net asset value (i.e., the price of a share equals total assets minus liabilities divided by the total number of shares). A mutual fund, also called an open-end investment company, owns the securities of several corporations and receives dividends on the shares that it holds. A closed-end investment company differs from an open-end company in that the number of shares is limited and the price of the shares may fluctuate above and below the net asset value. The earnings of a mutual fund are distributed to the holders of its shares. It is hoped that a loss on one holding will be made up by a gain on another. The holders of mutual-fund shares thus gain the advantage of diversification, which might ordinarily be beyond their means. Common mutual funds, which often provide skilled management for security holdings, include stock, bond, balanced, index, and money-market fundsmoney-market fund,
type of mutual fund that invests in high-yielding, short-term money-market instruments, such as U.S. government securities, commercial paper, and certificates of deposit. Returns of money-market funds usually parallel the movement of short-term interest rates.
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. Stock funds mainly invest in common shares, and bond funds in bonds; such funds may specialize in a particular category of stocks or bonds (such as Internet stocks or municipal bonds). A balanced fund might invest in preferred stocks and bonds in addition to common stocks. Index funds invest in a portfolio that mimics a given index, such as the stocks that make up the S&P 500. The forerunner of the modern mutual fund was established in Belgium in 1822, and the use of these closed-end investment companies soon spread to Great Britain and France. They became popular in the United States in the 1920s, but from the 1930s the open-end mutual fund became more popular. Mutual funds experienced a period of tremendous growth after World War II, especially in the 1980s and 90s.

Bibliography

See M. Useem, Investor Capitalism: How Money Managers Are Changing the Face of Corporate America (1996).

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are a hybrid of conventional open-end mutual fund shares and ETFs.
Another expense that varies among mutual fund share classes is load.
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Money market instruments: Money market mutual fund shares, federal funds and security repurchase agreements, open market paper
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How is a shareholder taxed when he sells, exchanges, or redeems his mutual fund shares?
that the market for mutual fund shares looks much more like a market for
Decomposing financial assets, four of nine subcategories of financial assets declined last quarter: corporate equities, pension fund reserves, mutual fund shares, and deposits.
These mutual fund shares may take the place of loan participations in a credit union's portfolio.
* Mutual funds: When you buy mutual fund shares from a stockbroker or other investment professional, you might have to pay sales charges, called loads, which are calculated as a percentage of the amount you invest.
Instead of guaranteeing a dollar value, the initial premium buys a guaranteed number of units, like mutual fund shares. If the investments appreciate, so do the values of the units.
The purpose of this paper is to determine whether a fund manager's personal ownership of mutual fund shares is associated with differences in mutual fund performance.

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