A collective security created and managed by an investment firm, consisting of a diversified basket of stocks, bonds, or other securities which continually offers shares for sale, and redeems them upon demand.


Key benefits of mutual funds include diversification and professional management.  These benefits, when obtained through investment in a true no-load, low expense ratio, low turnover fund, are worthwhile, and have made the mutual fund (and its cousin the exchange traded fund) the favorite form of investment.  However, most mutual funds are not so cost effective.  A typical Actively managed fund may involve a high load, a high expense ratio, and high turnover.  The result is excessive cost, which can make a mutual fund an undesirable investment.