What is Mutual Funds?
People should distinguish between three main types of investment companies. These organizations that focus on issuing in investing in securities divide into mutual funds, closed end funds and unit investment trust. Mutual funds are also known as open end organizations.
Mutual fund is an investment vehicle that lets many investors to pool the money. And then mutual fund enables these investors to have it jointly managed by an investment manager.
In general, the process of investing looks like this: a company recieves the money from investors and then it invests this money in some industry. An investment company deals with the money on the collective basis. Each investor is entitled to a "pro rata" share and participates in the profits and losses. Mutual fund distributes its income each year to avoid taxation. A distribution consists of capital gains, interest and dividend income. Distributions can be made monthly.