What best defines a mutual fund?

A mutual fund is best defined as an investment vehicle that pools money from multiple investors to purchase a diversified portfolio of securities. This structure allows individual investors to gain access to a wide array of investments, such as stocks, bonds, and other assets, which they may not be able to afford individually. The pooling of funds enables mutual funds to achieve diversification, which can mitigate risk by spreading investments across various sectors and securities.

Additionally, the management of the mutual fund is typically handled by professional portfolio managers who make investment decisions on behalf of the investors, further enhancing the attractiveness of this investment vehicle. This professional management combined with diversification makes mutual funds a popular choice for both novice and experienced investors looking to grow their wealth over time while managing risk more efficiently.