13th Nov 2009 by Gary
A mutual fund is a basket of investments, which normally include stocks, bonds and cash. There would be exceptions such as commodities, etc., but overall the first three are the usual practice. Mutual fund managers include a blend of stocks, bonds and cash in order to produce an investment vehicle targeted to a person's risk tolerance and investment goals. An index fund on the other hand simply tracks specific sectors or companies, and don't need much management other than the focus of the fund; the reason why fees are low when investing in an index fund.
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