A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. These investors may mutual fund performance analysis pdf retail or institutional in nature. Mutual funds have advantages and disadvantages compared to direct investing in individual securities. The primary advantages of mutual funds are that they provide economies of scale, a higher level of diversification, they provide liquidity, and they are managed by professional investors.
On the negative side, investors in a mutual fund must pay various fees and expenses. It remains unclear whether mutual fund management can reliably produce an increase in investment returns exceeding these fees and expenses. Primary structures of mutual funds include open-end funds, unit investment trusts, and closed-end funds.