01 What is a mutual fund?
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This article is from the FAQ, by with numerous contributions by others.
01 What is a mutual fund?
A mutual fund, otherwise known as an investment company, is a corporation
which pools together investor's money generally to purchase stocks and bonds.
Investors participate in the mutual fund by purchasing shares of the entire pool
of assets, thus diversifying their investment. The pooled assets are invested by
professional managers who buy and sell securities on behalf of the investors.
Because mutual funds pass all gains, losses and tax obligations/benefits through
to investors, mutual funds receive preferential tax treatment under the U.S. Internal
Revenue Code.
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