Mutual Fund
A pooled investment where many investors' money is combined and managed as one portfolio. You buy and sell once per day at the closing price, not during market hours.
By Findley's Finance · Last reviewed: September 2026
Why it matters
Mutual funds were the original diversified investment for regular people, and they still dominate 401(k) menus. Their weakness versus ETFs: most are actively managed with higher fees, they trade only once daily, and they can surprise you with taxable distributions even in years you sold nothing. In a taxable account, an ETF tracking the same index is usually the better wrapper.