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Why Mutual Funds Are So Popular

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What is the function of a mutual fund? Why are mutual funds popular among investors? How does a money market mutual fund differ from a stock or bond mutual funds?

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Solution Summary

This solution discusses why investors opt for investments in mutual funds, and differentiates between a money market mutual fund and a bond mutual fund.

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In general, a mutual fund offers small investors certain advantages generally reserved for larger investors. These include the ability to take meaningful positions in the publicly-traded securities of many entities (both corporate and governmental), the ability to employ the skills of highly-trained professional analysts and traders, access to the best prices for securities and to markets around the world, and close monitoring of the entities and securities owned in the portfolio. For example, while few CEOs will meet with individual investors, most will enthusiastically meet with people ...

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