Mutual Fund

A mutual fund, or an open-end fund, sells as many shares as investor demand requires. In this investment vehicle, the more the money flows in, the faster the fund grows. Alternatively, if the money flows out of the fund, its number of outstanding shares drops. Open-end funds are sometimes closed to new investors, although existing investors may still continue to invest money in the fund. In order to sell shares, an investor usually sells them back to the fund itself. However, if the investor wishes to buy additional shares in a mutual fund, the investor must buy newly-issued shares directly from the fund.

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