| What They Are |
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Mutual funds have become increasing popular with individual investors over the past couple decades. But what exactly is a mutual fund? A mutual fund is defined as any collection of stocks, bonds, or other securities owned by a group of investors and managed by a professional investment company. The investment company must register with the SEC and must have at least 100 investors and at least $100,000 in assets under management. When most investors think of a mutual fund, they think of a stock fund, but there are funds that buy corporate bonds, municipal bonds, a combination of stocks and bonds, and money market securities.
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| What They Can Do For Your Portfolio |
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Most experts agree that investors should own a variety of stocks and bonds rather than gambling on a few. The common buzzword 'diversification' refers to this concept. Professional investors with lots of time and money have no problem building a diversified portfolio of individual securities, but this can be difficult for the novice. Even if the investor has enough assets to diversify with individual securities, managing the portfolio can be a full-time job.
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