A mutual fund pools money from many investors and uses it to buy a mix of investments, such as stocks, bonds or both. Mutual funds are created and managed by professional investment management companies.
When you invest in a mutual fund, you own units of the fund rather than owning the individual investments directly. Some mutual funds hold hundreds — or even thousands — of investments within a single fund.
Mutual funds can focus on many different parts of the market. Some provide broad exposure to Canadian, U.S. or global markets, while others focus on specific sectors, regions, investment strategies or asset classes.
Some mutual funds are passively managed, meaning they aim to follow an index and match its performance. Others are actively managed, where professional managers choose investments in an effort to outperform an index.
Mutual funds are priced once per day after markets close. This price is called the net asset value (NAV).
