Mutual Funds

What are mutual funds?

A mutual fund is a portfolio of assets like stocks and bonds that is managed, actively or passively, by professionals who charge a management fee.

What does it mean for a mutual fund to be actively managed? For this type of mutual fund, experts picks stocks and bonds and charge fees.

In the case of passively managed mutual funds, no one is actively picking the stocks and bonds. Instead, it is a big basket of stocks. As you might guess, the fees for passively managed mutual funds are much lower than they are for the actively managed ones.

Want to learn more about personal finance from an economist’s perspective? Check our Investing section of Money Skills.