This section is meant to be read with all the material contained in the Financial Planning Section . A mutual fund is an investment company that makes investments for a group of people who share similar financial goals. The only business a mutual fund is in is investing and re-investing their shareholders money.
Mutual funds are corporations.
A corporation which is not a mutual fund raises capital by selling shares of stock which have been authorized but not yet issued. They do this when they need to raise capital for a specific need. A mutual fund has a continuing need for capital. Therefore, mutual funds have what is called a 'Continuous Offering of New Shares'. The result is that current shareholders of the mutual fund have a very liquid asset.