Mutual fund

A mutual fund collects money from many investors and uses it to purchase a portfolio of securities. A fund manager decides what to buy and sell, and each investor owns a proportional shareTermStock×السهمA share of ownership in a company, bought and sold on a stock exchange, that may pay dividends and rise or fall in value.Open the term of the entire portfolio. The fund's value rises or falls with the value of its holdings, and investors can buy or sell their shares at the fund's net asset value, calculated daily.

A mutual fund gives a household access to diversificationTermDiversification×التنويع الاستثماريSpreading money across different investments instead of concentrating it in one, so the entire portfolio does not collapse if one investment fails.Open the term and professional management without the capital or expertise required to build and monitor a portfolio alone. Instead of choosing individual stocks or bonds, an investor buys into a single fund holding dozens or hundreds of securities. The cost of this service is an annual management fee, typically a percentage of assets under management, and sometimes an entry or exit fee when buying or selling shares. The return arrives in the currency the fund is denominated in, which may differ from your local currency if the fund invests internationally. Because the fund is professionally managed, the investor accepts whatever decisions the manager makes rather than controlling the portfolio directly.

• A mutual fund's past performance does not predict future returns, and different funds with similar mandates can produce very different results depending on the manager's choices.
• The annual fee (expense ratio) compounds over time and can significantly reduce long-term returns, so comparing fees across similar funds matters.
• Some funds are actively managed (a manager picks holdings) and others are passive (they track an index). Active funds charge higher fees but do not consistently outperform passive ones.
• Mutual funds are regulated investments, and the fund prospectus discloses the holdings, strategy, and fees. Read it before investing.