funds

Funds are pools of money collected from multiple investors to be invested in a diversified portfolio of assets. A fund is managed by professional investment managers who implement a defined objective, such as growth, income, or capital preservation. Investors own units or shares in the fund and participate in its gains, losses, and distributions.

Common fund types include mutual funds, which are open-ended and priced daily; exchange-traded funds (ETFs), which trade on exchanges and often track an index; hedge funds, which pursue flexible strategies and may employ leverage and higher fees; private equity funds, which invest in privately held companies; and larger pools such as pension funds, sovereign wealth funds, and university endowments that manage long-term assets for specific purposes.

Governance and fees vary by type and jurisdiction. Funds incur management fees and operating expenses, and many investment funds may charge performance fees. Regulation generally requires disclosure of objectives, strategies, fees, and risks. In the United States, registered investment companies are overseen by the SEC under the Investment Company Act, while Europe features frameworks such as UCITS for certain retail funds.

Valuation and liquidity are inherent characteristics. Funds typically calculate a net asset value (NAV) per share or unit, with liquidity depending on the fund structure—some allow daily redemptions, others have limited liquidity. Tax treatment varies by jurisdiction and fund, with pass-through structures common for many investment funds and distributions taxable to investors. Performance, fees, taxes, and risk profile all influence an investor’s outcome.