A mutual fund is one which is made up of money from lots of different individual investors, and then managed by a professional portfolio manager. Mutual funds invest in all the usual assets such as:

  • Bonds
  • Equities
  • Derivatives

The amount an investor gains or loses in the fund is directly proportional to the amount they invest into the fund. Mutual funds typically have a target level of return and usually charge a management fee of 1-2% per annum.

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