Editing Mutual fund (section)

{{Short description|Professionally managed investment fund}}
{{financial markets}}
A '''mutual fund''' is an [[investment fund]] that pools money from many investors to purchase [[Security (finance)|securities]]. The term is typically used in the [[United States]], [[Canada]], and [[India]], while similar structures across the globe include the [[SICAV]] in Europe ('investment company with variable capital'), and the [[open-ended investment company]] (OEIC) in the UK.

Mutual funds are often classified by their principal investments: [[money market fund]]s, [[bond fund|bond or fixed income funds]], [[stock fund|stock or equity funds]], or hybrid funds.<ref>{{Cite web | url=https://www.investor.gov/introduction-investing/investing-basics/investment-products/mutual-funds-and-exchange-traded-1 | title=Mutual Funds | publisher=[[U.S. Securities and Exchange Commission]] | access-date=2021-10-03 | archive-date=2021-10-08 | archive-url=https://web.archive.org/web/20211008191931/https://www.investor.gov/introduction-investing/investing-basics/investment-products/mutual-funds-and-exchange-traded-1 | url-status=live }}</ref> Funds may also be categorized as [[index fund]]s, which are [[passively managed]] funds that track the performance of an index, such as a [[stock market index]] or [[bond market index]], or [[actively managed]] funds, which seek to outperform stock market indices but generally charge higher fees. The primary structures of mutual funds are [[open-end fund]]s, [[closed-end fund]]s, and [[unit investment trust]]s. Over long durations, passively managed funds consistently outperform actively managed funds.<ref>{{Cite news |date=2022-12-02 |title=Mutual Funds That Consistently Beat the Market? Not One of 2,132. |language=en |work=New York Times |url=https://www.nytimes.com/2022/12/02/business/stock-market-index-funds.html |access-date=2023-08-21}}</ref><ref name=":12">{{Cite journal |last=Choi |first=James J. |date=2022 |title=Popular Personal Financial Advice versus the Professors |url=https://www.aeaweb.org/articles?id=10.1257/jep.36.4.167 |journal=Journal of Economic Perspectives |language=en |volume=36 |issue=4 |pages=167–192 |doi=10.1257/jep.36.4.167 |issn=0895-3309 |doi-access=free}}</ref><ref>{{Cite journal |last=Malkiel |first=Burton G. |date=2013 |title=Asset Management Fees and the Growth of Finance |url=https://www.aeaweb.org/articles?id=10.1257/jep.27.2.97 |journal=Journal of Economic Perspectives |language=en |volume=27 |issue=2 |pages=97–108 |doi=10.1257/jep.27.2.97 |issn=0895-3309|doi-access=free }}</ref> 

Open-end funds are purchased from or sold to the issuer at the [[net asset value]] of each share as of the close of the trading day in which the order was placed, as long as the order was placed within a specified period before the close of trading. They can be traded directly with the issuer.<ref>{{Cite web | url=https://www.sec.gov/reportspubs/investor-publications/investorpubsinwsmfhtm.html | title=Mutual Funds and Exchange-Traded Funds (ETFs) – A Guide for Investors | publisher=[[U.S. Securities and Exchange Commission]] | access-date=2021-10-03 | archive-date=2017-03-08 | archive-url=https://web.archive.org/web/20170308011635/https://www.sec.gov/investor/pubs/inwsmf.htm | url-status=live }}</ref>

Mutual funds have advantages and disadvantages compared to direct investing in individual securities. The advantages of mutual funds include [[economies of scale]], diversification, liquidity, and professional management.<ref>{{Cite book |author1=Deepthi Fernando |author2=Leora Klapper |author3=Víctor Sulla |author4=Dimitri Vittas |url=http://documents1.worldbank.org/curated/en/342341468781751457/108508322_20041117143517/additional/multi0page.pdf |title=World Bank Policy Research Working Paper 3055 |date=2013-05-31 |publisher=World Bank |language=en |access-date=2020-12-21 |archive-date=2022-07-08 |archive-url=https://web.archive.org/web/20220708232101/https://documents1.worldbank.org/curated/en/342341468781751457/108508322_20041117143517/additional/multi0page.pdf |url-status=live }}</ref> As with other types of investment, investing in mutual funds involves various [[mutual fund fees and expenses|fees and expenses]].

Mutual funds are regulated by governmental bodies and are required to publish information including performance, comparisons of performance to benchmarks, fees charged, and securities held. A single mutual fund may have several share classes, for which larger investors pay lower fees.

[[Hedge fund]]s and [[exchange-traded fund]]s are not typically referred to as mutual funds, and each is targeted at different investors, with hedge funds being available only to high-net-worth individuals.<ref>{{Cite web |title=Mutual Funds vs. Hedge Funds: What's the Difference? |url=https://www.investopedia.com/ask/answers/173.asp |access-date=2023-01-05 |website=Investopedia |language=en |archive-date=2023-01-05 |archive-url=https://web.archive.org/web/20230105050058/https://www.investopedia.com/ask/answers/173.asp |url-status=live }}</ref>