The idea that there is strength in numbers is the heart of a mutual fund. A mutual fund brings together money from many people and invests it in stocks, bonds or other assets. The combined holdings are known as the fund’s portfolio. When you invest in a fund, you own shares in the fund’s portfolio.
Before choosing a fund, be sure to read the fund’s summary prospectus, its prospectus and any other documents. Look for crucial information about the fund such as:
- Investment objective and strategies
- Fees and expenses
You can also get third-party information about mutual funds through an independent fund rating service, such as Morningstar or Lipper.