Mutual Fund

A collective investment scheme operated by an investment company that enables small private investors to invest in a diversified portfolio of shares, bonds and other securities. Known as an open-ended fund since there is no fixed amount of capital in the fund. If new investors want to invest, the fund can issue new units, accepting the money into the pool. Funds are managed by professional fund managers who invest in securities to achieve the trusts objectives such as capital growth, income or a combination of the two. There is a wide range of funds with a variety of objectives available in which to invest including capital growth and income. It is traditionally a US term, with a unit trust being the equivalent in the UK.