A mutual fund is the ideal investment vehicle for today's complex and modern financial scenario. Markets for stocks, bonds and other income instruments, real estate, derivatives and other assets have become mature and information-driven. Price changes in these assets are driven by global events occurring in faraway places. A typical individual is unlikely to have the knowledge, skills, inclination and time to follow events, understand their implications and act quickly. An individual will also find it difficult to track their asset ownership, investments, brokerage fees and banking transactions, etc. Say no to plagiarism. Get a Custom Essay on “Why Violent Video Games Should Not Be Banned”?Get an Original EssayA mutual fund is the answer to all these situations. It appoints professionally qualified and experienced staff who manage each of these functions on a full-time basis. The large amount of money raised in the fund allows it to hire this staff at a very low cost to each investor. In effect, the mutual fund vehicle exploits economies of scale in all three areas: research, investment and transaction processing. Although the concept of bringing together individuals to collectively invest money is not new, the mutual fund, in its current form, is a 20th century phenomenon. In fact, mutual funds didn't gain popularity until after World War II. Globally, thousands of companies offer tens of thousands of mutual funds with different investment objectives. Today, mutual funds collectively manage almost as much, if not more, money than banks. Mutual funds are an investment company that pools shareholders' money and invests in a variety of securities such as stocks, bonds and short-term money market instruments or other securities. In a mutual fund, the fund manager trades the funds underlying the securities, realizing capital gains or losses, and receiving dividends or interest income. The investment proceeds are then returned to individual investors. The value of a share of the mutual fund, known as the net asset value (NAV), is calculated daily based on the total value of the fund's dividends by the number of shares purchased by investors. The mutual fund can invest in many types of securities. . The most commonly purchased securities are cash or money market instruments such as senior loans and derivatives such as futures, forwards, options and swaps. Keep in mind: this is just a sample. Get a personalized document now from our expert writers. Get a Personalized Essay The fund's investment portfolio is continuously monitored by one or more employees within the sponsoring investment advisor or management company, generally referred to as a portfolio manager and their assistant, who invest the fund's assets in accordance with to its investment objective and trades securities in relation to any net inflow or outflow of investors' capital as well as the ongoing performance of investments appropriate to the fund. The mutual fund is advised by an investment advisor under an advisory contract which is generally subject to annual renewal..