mutual fund
A mutual fund is an entity registered and run by an investment company or investment bank . The shareholders of a mutual fund invest money in the fund, which is run by the professional team who anticipate a high return. Commonly the mutual fund will be diversified in different areas like stocks , bonds , and other options or futures to maximize profits and lower the risk. There are two types of funds; an open-end fund, which allows investors to redeem anytime, and a closed-end fund, which is only traded among investors on the secondary market . All mutual funds are subject to the Securities Act of 1933 , the Securities Exchange Act of 1934 , and the Investment Company Act of 1940 , and are monitored by the SEC .
See also: securities
[Last reviewed in May of 2022 by the Wex Definitions Team ]
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