Course: The basics of capital markets
Lesson Insights
Investment funds pool together the money of multiple investors and use it to purchase a diversified portfolio of assets, such as stocks, bonds, and real estate. This allows individual investors to participate in the securities and real estate markets even if they do not have the knowledge, time, or resources to invest on their own. Investment funds are managed by professional fund managers who are responsible for making investment decisions, monitoring market conditions, and adjusting the fund's portfolio as needed. The fund's holdings are divided into shares, which are bought and sold by investors on a stock exchange or over-the-counter market. Investment funds provide investors with several benefits, including easy access to a diverse portfolio of assets, lower investment costs due to economies of scale, and reduced risk through diversification. However, like all investments, investment funds also come with certain risks, such as market risk and management risk, so it is important for investors to carefully consider their goals, risk tolerance, and investment timeframe before choosing a fund.
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