Introduction to mutual funds
Mutual Funds have become popular very recently because they are easy for investors to understand. They provide a diversified approach to investing, and typically they are managed by professional money managers. Mutual funds have many investors and significant resources for money managers to invest. Mutual funds are attractive because the individual assets of investors may not be enough to excite a top-notch professional money manager, but collectively, the assets of many investors can be a huge pool of resources that can then attract the best money managers.
Typical examples of mutual funds are Fidelity and Oppenheimer Mutual funds and other similar names. Typically, the larger funds have a number of different funds within their "family", and are called Fund Family. Fidelity for example has a number of different types of funds, with different investment objectives, all under the Fidelity umbrella. Typically there are stock funds in bond funds and then mixtures of stock in bond funds. Many mutual funds are designed to take advantage of the stock market in general, while other mutual funds are designed to invest in specific industries, typically called sector funds. There may also be funds that are invested primarily in overseas businesses, there may be funds invested primarily in emerging third world country companies. The investor should understand that a mutual fund is a very general term for a number of very specific types of investment goal-controlled funds.