Markets · 6 pages · 12 min

How a mutual fund pools money

A mutual fund gathers investors' cash into one portfolio and gives each a share of the pool.

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From the opening

An open-end mutual fund pools money from many investors and buys a portfolio that the fund, not each investor, holds. Each investor owns shares of the fund, which are a proportional claim on the assets and the costs of that shared pool. The opening covers many investors, one portfolio, shares are claims on the pool, and cash enters and leaves daily.

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Inside

Many investors, one portfolio
Shares are claims on the pool
Cash enters and leaves daily
Fees come out of assets
Where the idea stops applying
A distinction worth keeping

Sources

Open-end mutual fund
Fund share class

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How a mutual fund pools money

From the opening

Inside

Sources

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