A mutual fund is the ideal investment vehicle for today's modern and complex financial landscape. Markets for stocks, bonds and other income instruments, real estate, derivatives and other assets have become mature and information-driven. Changes in the prices of these assets are driven by global events occurring in distant places. A typical individual is unlikely to have the knowledge, skills, inclination and time to track events, understand their implications and act quickly. An individual will also have difficulty keeping track of ownership of their assets, investments, brokerage shares and banking transactions, etc. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay A mutual fund is the answer to all these situations. Appoint professionally qualified and experienced staff to manage each of these functions on a full-time basis. The large sum of money raised in the fund allows it to hire such staff at a very low cost to each investor. In fact, the Mutual Fund vehicle takes advantage of economies of scale in all three areas: research, investment, transaction processing. While the concept of individuals coming together to collectively invest money is not new, the mutual fund in its current form is a 20th century phenomenon. In fact, mutual funds only gained popularity after World War II. Globally there are thousands of companies offering tens of thousands of mutual funds with different investment objectives. Today, mutual funds collectively manage nearly as much or more money than banks. A mutual fund is 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 collects the dividend or interest income. The investment proceeds are then passed on to individual investors. The value of a mutual fund share, known as net asset value (NAV), is calculated daily based on the fund's total dividend value based on the number of shares investors purchase. The mutual fund can invest in many types of securities. The most common securities purchased are cash or money market instruments such as senior loans and derivatives such as forwards, futures, options and swaps. Please note: this is just an example. Get a custom paper from our expert writers now. Get a Custom EssayMost Mutual The fund's investment portfolio is continuously monitored by one or more employees within the sponsoring investment advisor or management company, generally called the portfolio manager, and their assistant, who invest the fund's assets in accordance with its investment objective and trade securities in relation to any net inflows or outflows of investor 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 agreement that is generally subject to annual renewal.