The odds are high that you already own a mutual fund. You're in good company: at the end of 2013, an estimated 96 million people in the United States had, on average, invested 22 percent of their money through a fund.1 Notice that we say that you invest through a mutual fund rather than in a fund. That's because a mutual fund isn't really an investment itself; it's just an intermediary—a financial intermediary.
Mutual funds have made it easy for individuals (you, me, and anyone with money to invest) and institutions (corporations, foundations, pension funds) to pool their money to buy stocks, bonds, and other investments. A fund is mutual because all of its returns—from interest, dividends, and capital gains—and all of its expenses are shared by the fund's investors.
Funds offer investors advantages over buying and selling securities directly, including:
These benefits have proven to be very popular with investors around the world; they held a total of $30 trillion in fund assets at the end of 2013. U.S. households now put more of their ...