What type of investment vehicle is a mutual fund?

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A mutual fund is recognized as a pooled fund from multiple investors. This investment vehicle allows individual investors to contribute money collectively, which is then utilized to purchase a diverse portfolio of stocks, bonds, or other securities. The pooling of resources not only increases the purchasing power of individual investors but also enables them to achieve diversification in their investments, which can help manage risk.

Mutual funds are managed by professional asset managers who make investment decisions on behalf of the fund's investors. This makes mutual funds an appealing choice for those who may not have the time or expertise to manage their own portfolios. Thus, the ability to pool capital from many investors is a fundamental characteristic of mutual funds that distinguishes them from other investment types like individual investments or fixed deposit accounts.

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