A Mutual Fund is an investment product that acts as a delegated investment manager. When an investor buys a mutual fund, the investor gives his cash to a financial management company that will use the cash to build a portfolio of assets according to the fund’s investment objective.The main advantage of investing in a mutual fund is that it provides small investors with access to professionally managed portfolios of stocks, bonds, and other securities. By pooling the resources of many investors, mutual funds are able to make investments that would be unavailable to most individual investors.Another advantage of mutual funds is that they offer diversification within one investment product. Diversification helps protect against losses due to factors such as market volatility or company-specific risk.For example, if you invest in only one stock and that stock goes down in value, your entire investment portfolio loses value. However, if you invest in several different stocks through a mutual fund and one stock decreases in value, the other stocks may offset those losses.
