Mutual Funds
Unlike closed-end funds, mutual funds are open-end funds. So we may say that closed-end funds are a special type of mutual fund.
Mutual funds are operated by an investment company which raises funds from shareholders and invest the money in various assets such as stocks and bonds. Therefore a mutual fund is a pool of assets managed by the issuing company. The choice of assets depend on a set of objectives.
As mentioned already, money is raised by selling shares of the fund to the public. Shareholders then acquire ownership position of the fund and thereby the underlying assets. Shareholders benefit from the diversified portfolio and are also able to take money out of the fund whenever they want to. Therefore mutual funds are convenient and liquid. Another benefit of mutual fund is professional money management but the cons include the payment of a fee and a minimum balance requirement.
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