Meaning of mutual fund | Babel Free

Definitions

A form of collective investment in which money from many investors is pooled and invested in stocks, bonds, short-term money market instruments, or other securities under the direction of a fund manager.

Equivalents

Examples

“The work⟳ of the Laureates has affected not only academic research⟳ but also market practice. The fact that stock⟳ markets are very hard to predict⟳ in the short run⟳, and that stock-picking is very difficult both in the short and the long run⟳, has led to close⟳ examination of the performance by mutual funds. Research⟳ generally has failed to find⟳ that mutual funds generate⟳ positive returns above what can be motivated by the level of risk⟳; once fund fees are taken into account, their asset management often yields negative excess returns. The recent growth of index funds, which collect⟳ all stocks in passively managed portfolios, follows that insight. Moreover, the few successful specialized funds we observe⟳ are often motivated by the new factors – “size” and “book-to-market” – that are included in the extended version of the CAPM.”

CEFR level