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What
is Mutual Fund?
The idea behind a mutual
fund is simple: Many people pool their money in
a fund, which invests in various securities.
Each investor shares proportionately in the fund's
investment returns --
the income (dividends or interest) paid on the securities
and any capital gains or losses caused by sales of
securities the fund holds.
Every mutual fund has a manager, also called an investment
adviser, who directs the fund's investments according
to the fund's objective, such as long-term growth,
high current income, or stability of principal. Depending
on its objective, a fund may invest in stocks, bonds,
cash investments,
or a combination of these financial assets.
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