Stocks
1:22
What Are Mutual Funds? | Mutual Funds Explained
Become the master of Mutual funds with this video from Titan's Christopher Seifel explaining how they work, fees and pros and cons.
Video Transcript
A mutual fund is a type of investment that pools a group of investor's capital to access a bundle of stocks, bonds or other securities. Another way to put it, they offer investors access to certain styles of investing, like large company stocks, municipal bonds, value stocks, international stocks, and so on. Mutual funds are typically actively managed, which means there's a person or a team of people managing the investments, and they have discretion to make decisions on what goes in and out of the fund. As a result of the active management by humans, mutual funds tend to charge higher fees than index funds. Money invested grows when the value of the fund increases based on gains in the underlying assets.
The securities the fund owns also generate dividends and interest, which the fund passes through and distributes to shareholders. Additionally, you and other investors receive a share of the proceeds when mutual funds sell securities. To be frank, at Titan we view mutual funds as a VHS tape because of their black box experience of what's inside. Layers of financial costs and the slow and expensive cost to create them. They help lay the foundation for where investment products are today, but they're not the future.
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