What is an investment fund?

Investment funds are collections of securities co-owned by a group of investors. Mutual funds, money market funds, and exchange-traded funds are common examples where individual investors own shares in a fund that is operated by a fund manager.

With an investment fund, an individual investor does not have a say in how the fund invests its pool of money. Rather, investors analyze a fund’s goals, risks, and fees before deciding whether that fund is likely to perform according to their expectations. To invest in the fund is to buy shares that can then be traded on the market the same as other equities.

Because investment funds consist of multiple assets, they may be suitable for investors who want to diversify their portfolios. Investment funds are also useful for investors who may lack the analytical skills and experience they believe a fund manager may be able to provide.

All investing involves risk including loss of principal.


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