In a mutual fund, investors pool money to be invested on their behalf by a professional manager. The proceeds of the investments are passed along to each shareholder according to the number of shares they own, after expenses and management fees are deducted. Shares can be bought or sold at any time, at the price calculated at the end of the trading day. The arrangement generally allows investors to benefit from a more diversified basket of investments than they could assemble on their own, potentially including stocks, bonds, cash and commodities. A document called a prospectus outlines each fund’s investment mix, fees and expenses.
