Knowra Mutual fund Mutual fund A mutual fund pools money from shareholders to buy a portfolio of securities. Each shareholder owns fund shares whose value reflects a proportional claim on the fund’s net assets.
Net asset value : The per-share value of a fund’s assets minus its liabilities, calculated under its valuation rules. It sets the price at which open-end mutual fund shares are bought and redeemed.
Securities : Tradable financial instruments representing ownership, debt, or rights to future cash flows. A fund’s portfolio is built from securities such as stocks and bonds.
Exchange-traded fund : An investment fund whose shares trade on an exchange throughout the trading day. Unlike conventional open-end mutual funds, ETFs trade intraday at market prices.
Asset allocation : The division of an investment portfolio among asset classes such as stocks, bonds, and cash. Investors combine funds with different holdings to set their overall risk and return profile.
Investment Company Act of 1940 : A U.S. federal law establishing major regulation of investment companies, including mutual funds. It defines core rules for fund structure, disclosure, custody, and conflicts of interest.
Open-end fund : An investment fund that issues and redeems shares directly with investors at a price tied to net asset value. Most mutual funds expand or contract by issuing and redeeming shares this way.
Share : A unit of ownership in a company or investment fund. Mutual fund shareholders own units of the fund rather than its individual portfolio securities.
Closed-end fund : An investment company that issues a fixed number of shares, which trade on exchanges. Its share price can diverge from portfolio value, unlike routine open-end fund transactions.
Target-date fund : A fund that adjusts its asset mix over time toward a specified future investment date. It packages a changing portfolio allocation into a single mutual fund investment.
John C. Bogle : An American investor who founded Vanguard and advanced low-cost index investing. His fund model helped make inexpensive diversified mutual fund investing widely available.
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