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A pooled investment vehicle that collects money from many investors to invest in a diversified portfolio of stocks, bonds, or other securities, managed by a professional portfolio manager.
Mutual funds are priced once per day at the net asset value (NAV) calculated after the market closes. Unlike ETFs, they cannot be traded intraday. Mutual funds can be actively managed (a manager picks investments) or passively managed (tracking an index). Load funds charge a sales commission (front-end or back-end), while no-load funds do not. The average actively managed mutual fund charges an expense ratio of about 0.60-1.00%. With over $20 trillion in U.S. mutual fund assets, they remain one of the most popular investment vehicles, particularly in retirement accounts like 401(k)s.