InsiderFlow › Glossary › What is a mutual fund?

What is a mutual fund?

A mutual fund pools many savers' money and invests it in a professionally managed portfolio: the classic managed-savings vehicle.

Each investor owns units proportional to the capital contributed; the manager decides what to buy and sell within the fund's mandate (equity, bond, balanced). The assets are legally segregated from the management company's.

The Achilles' heel is cost: between management fees (often 1–2.5% yearly) and possible entry and performance fees, most active funds return less than a simple index ETF on the same market.

Concrete example

On $10,000 over 20 years at 6% gross, a 2% cost instead of 0.2% devours over $9,000 of the final sum: the difference between a pricey fund and a cheap ETF.

How you see it in InsiderFlow

On InsiderFlow these concepts come alive on real data: what big funds and insiders are buying, explained every day.

Frequently asked questions

Are mutual funds and ETFs the same thing?

The principle is similar (pooled, diversified assets), but ETFs trade on exchanges, cost far less and are almost always passive.

Are mutual funds safe?

Assets are segregated and supervised: the risk isn't fraud but costs and management results.