A mutual fund pools assets from many investors to purchase a portfolio of securities operated by a professional money manager.
When you buy a mutual fund, you own “a fractional interest in each of the underlying positions, giving you diversification you could not easily obtain if you were buying individual positions,” said Bob Peterson, senior wealth advisor at Crescent Grove Advisors. You would have to buy shares of 500 stocks to create the same diversification you get from a single share of an S&P 500 index mutual fund.
Read full article in USA Today.