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Mutual fund

A mutual fund pools money from investors and issues redeemable shares priced from the fund's net asset value under its governing documents.

By Betta Signals Research Desk · Reviewed October 24, 2026

Plain-English definition: A mutual fund pools money from investors and issues redeemable shares priced from the fund's net asset value under its governing documents.[1]

How the term is used

Unlike an ETF that trades throughout the day, a traditional open-end mutual fund generally processes purchases and redemptions at the next calculated NAV. Share classes can carry different expenses or sales charges.[2]

What to check before relying on it

Review the objective, holdings, benchmark, expense ratio, turnover, distributions, minimums, redemption terms, and any sales load before comparing funds.

Example

Two share classes can own the same portfolio yet deliver different investor returns because their fees and sales arrangements differ.

Net asset value (NAV)Expense ratioShare class

Research last reviewed: October 24, 2026. This definition is educational and does not evaluate a particular security.

Sources

  1. Investor.gov: Mutual Funds — pooled mutual-fund structure, shares, and net asset value. Accessed October 24, 2026.
  2. FINRA: Mutual Funds — fund structure, NAV, expenses, distributions, and share classes. Accessed October 24, 2026.