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Find out how mutual funds work

Get to grips with one of the most common investment vehicles

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By

Charlie Barton

Updated

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Investments used to be reserved for those with high capital. Now, investors with lower incomes can get in on the action, pooling funds together to create a mutual fund.

What is a mutual fund?

A mutual fund sees a professional, or group of professionals, manage investments on behalf of other people. This service comes at a cost. The aim is for the management of the fund to outperform or ‘beat’ the market, resulting in higher returns for investors.

Typically, a fund manager will invest money in a diverse portfolio of holdings in an attempt to generate growth on the investment.

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