29 Can mutual funds trade on margin?
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This article is from the FAQ, by with numerous contributions by others.
29 Can mutual funds trade on margin?
While some brokerage firm margin policies may allow for an investor to
borrow against their mutual fund positions, mutual funds themselves are
prohibited from trading on margin. Additionally, mutual funds are also
prohibited from selling short to participating in joint trading ventures.
Because funds are prohibited from thee more speculative trading practices,
investors often form limited partnerships and other legal entities to bypass
these rules.
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