A mutual fund is a type of investment company that pools money from many investors with similar investment objectives in order to purchase stocks, bonds, money market instruments, and other securities. All owners in a mutual fund share in both the gains and losses of the fund.
Typical funds own a few dozen to a hundred securities.
Additionally, funds are managed by professional money managers, which means they focus all of their time on researching and analyzing the best potential opportunities for investors. A closed end fund is a mutual fund that issues only a certain number of shares outstanding that are traded just like other stocks on an exchange or over the counter. As many funds state, past performance is no guarantee of future results, and the fund shares are not backed or guaranteed by the FDIC or other government agency. Note that while some funds buy government backed securities, that is not the same as backing the market value of the fund shares. It is a fund's legal selling document that contains more complete information on a mutual fund's investment objective, services, and management fees.