mutual fund

An investment company that pools investors’ money to invest in securities. An open-end mutual fund continuously issues new shares when investors want to invest in the fund, and it redeems shares when investors want to sell. A mutual fund trades directly with its shareholders, and the share price of the fund represents the market value of the securities that the fund holds. Mutual funds, because of their size and the laws governing their operation, provide investors with diversification that might be difficult for an individual to duplicate.