Mutual Funds

Mutual fund holdings are the various stocks, bonds, and other securities held within a fund. When you buy shares in a mutual fund, your shares are allocated proportionally to the various securities held by the fund.

Mutual fund sales loads are a commission collected by stockbrokers or mutual fund companies when they sell shares of mutual funds to investors.

A mutual fund is an investment vehicle that aggregates money from many individuals and invests it in stocks, bonds, and other securities.

An equity fund is a special type of mutual fund or exchange-traded fund (ETF) that invests in common stocks, or equities, rather than bonds.

Dividend mutual funds are mutual funds that invest in stocks that pay dividends. If you invest in these funds, you can reinvest the dividends into more shares. Or, you can use the money as an income stream.

A closed-end fund is a type of investment vehicle that is similar to a mutual fund. The key difference between a closed-end fund and an open-end fund like a mutual fund or exchange-traded fund (ETF)—and what gives a closed-end fund its name—is that a closed-end fund is created with a fixed number of shares that investors trade on the open market rather than redeeming them with the fund company.

Mutual fund Class B shares may be one class of shares that investors can purchase when investing in a mutual fund. They do not have a front-end sales charge (like many Class A shares do), but they often have a sales charge when shares are sold. This is why Class B shares are also known as back-loaded shares.

R-squared in mutual funds is a statistical tool that investors use to compare a fund to a given benchmark. A higher R-squared value means the fund moves with the benchmark. Watching this metric can allow investors to monitor their assets and maintain a more diversified portfolio.

A mutual fund's beta is a measure of how volatile an investor can expect the fund to be compared to the overall market. A beta of more than one means that the fund is more volatile than the overall market, and a beta of less than one means that it is less volatile.

Mutual funds capital gains distributions occur whenever mutual fund managers sell shares of securities held within a fund. These distributions are taxable to the fund shareholders unless the fund is owned in a tax-deferred account, such as an IRA or 401(k).

Financial institutions such as mutual funds or banks manage a variety of securities on behalf of their clients. The term "assets under management" (AUM) describes the total amount of those assets managed by a particular bank or fund.