Mutual Fund FAQs What is a Mutual Fund? A mutual fund is an investment vehicle in which a pool of investors collectively put forward funds to an investment manager to make investments on their behalf. The fund is regulated by the Securities Exchange Commission, or SEC. When involved with a mutual fund, each investor benefits proportionally to the amount of money they invested. What are the types of Mutual Funds? The four types of mutual funds are: equity mutual funds, money market mutual funds, bond funds, and balanced funds. What are the pros and cons of investing in Mutual Funds? The advantages of mutual funds are the ability to diversify a portfolio across industries, low fees, and availability of professional expertise in the guise of fund managers. The disadvantages of mutual funds are that they do not provide ownership of underlying holdings to investors; hence, investors do not have much say on the composition and constituents of mutual funds. Mutual funds are also more expensive and riskier as compared to index funds. What are the tax implications of investing in Mutual Funds? If mutual funds are traded from inside a retirement account, then capital gains accruing from the sale are deferred. If, however, the trades occur outside a retirement account, then the investor is responsible for paying the prevailing capital gains tax. Does Mutual Fund ownership give you voting rights? Buying shares of a mutual fund does not give investors voting rights in a company; instead the fund manager votes on their behalf. About the Author True Tamplin, BSc, CEPF® Facebook Linkedin Instagram Twitter Youtube True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists. True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics. To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.