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).

References in periodicals archive ?
(9) The following definitions of share classes are based upon materials made available by the Mutual Fund Education Alliance[TM] in its online Mutual Fund Investor's Center (www.mfea.com).
As on June 30, 2018, there were 19 asset management companies in the country managing 259 funds including open-ended and closed-end funds as well as voluntary pension schemes, according to the Mutual Funds Association of Pakistan (Mufap) Yearbook 2018.
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Keywords: Risk, Mutual Fund, Return on Investment, Level of Risk, Liquidity, Financial Literacy
The mutual fund industry must know that large number of retail investors not only result in increased assets under management but also enhance the stability of the funds and the industry in general, finally leading to deduction in the systemic risk.
In fact, a self-regulatory organisation (SRO) for mutual fund distributors also ran into trouble two years ago.
Also, the mutual fund industry paid a tremendous amount of money advertising itself.
In the past few years, a number of global players have exited the Indian mutual fund business.

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