The objective of this guide is to explain what mutual funds are, how they have developed and how they are used, regulated and administered across the globe. Both open-ended and closed-ended funds are described and, where appropriate, the differences between the international markets, particularly USA, Europe and UK are addressed.

We tend to use the word ‘funds’ to mean both the hard cash that constitutes the initial capital that is available for investment and also for the ‘vehicle’ or medium through which the resulting investments are made and managed.

Thus, ‘personal funds’ comprise the cash in our pockets and the balances in our bank accounts, some of which can be thought of as ‘committed funds’, needed to cover current expenditure, and some of which may not be required for some time, but nonetheless is earmarked for a future event. If there's any surplus beyond these two types of commitment, apart from being among the fortunate few, we have ‘spare funds’.

What we choose to do with our spare funds – and, indeed, with the funds that are not required until some time in the future – is a personal matter. We may regard spare funds as ‘fun money’ and opt to spend them on whatever takes our fancy. We shall hopefully take a responsible attitude to funds set aside or building up to meet future commitments or ambitions, but nevertheless may feel we can afford to place at least some of these funds, as well as ‘spare’ funds, into an ‘investment’, rather than leaving ...

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