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What Is A Mutual Fund?
Mutual fund is also known as unit trust in some countries. Mutual fund or unit trust is an investment vehicle that allows many investors to pool their money into one big account for the common purpose of investing in the financial markets.
Mutual funds are either open-ended or close-ended funds. If it is open-ended, it means that you can buy or sell the units at any time. For close-ended funds, there is usually an entrance window and you need to sell at the maturity date.  Mutual funds are classiffied according to their asset allocation, geographic focus and industry allocation.
Asset allocation is the percentage of the funds allocate to the equities or bonds or money markets, or more commonly a combination of these markets. The type of asset allocation would depend on the risk appetite of the investors. Equities is the highest risk type with a high return while the bond markets offer a low but stable income.
Geographic allocation is in term of country or region. For example, China, India, Japan or Asia, Europe, America or Global. The industry allocation refers to the business sector that the mutual fund will invest in. For example, Technology, Healthcare and Finance. You make money from mutual fund through any declared dividends and through capital gain when you sell off the units at a higher price.