Mutual Fund

An investment that is made up of a pool of assets collected from many investors to invest in securities, such as stocks, bonds, money market instruments, and other assets. Mutual funds are operated by portfolio money managers who invest the fund’s capital and depending on the fund’s mandate (as disclosed in the fund’s prospectus) tries to produce either capital gains, interest income, dividend income, and/or return of capital payments for the fund’s investors.

The main advantages of mutual funds is that they give small investors access to professionally managed, diversified portfolios of equities, bonds, and other securities, which would be almost impossible to create with a small amount of capital.