Glossary · Defined term
Mutual fund
A mutual fund pools money from many investors to buy a diversified portfolio, priced once daily after the market closes.
Last updated Oct 2, 2026
What it means
A mutual fund pools money from many investors to buy a diversified portfolio of stocks, bonds, or both, managed according to a stated strategy. Unlike ETFs, mutual fund shares are bought and sold directly with the fund company and are priced once per day, after the market closes, at the portfolio's net asset value. Many mutual funds are actively managed and charge higher expense ratios than index ETFs, and some impose minimum investments or sales charges called loads. Mutual funds remain popular in retirement accounts, where daily pricing and automatic investment plans fit long-term saving. Investors should read the prospectus to understand the strategy, costs, and risks.
An example
For illustration, an investor places a buy order for a mutual fund at 2 p.m. The order does not execute at 2 p.m. prices; it fills after the 4 p.m. close at that day's net asset value. An ETF bought at 2 p.m. would instead execute immediately at the live market price. That pricing difference is the key practical distinction.