◈ GLOSSARY · INVESTING
Mutual Fund.
A definition, in plain English — with the books that teach it.
Reviewed by ClearValue Editorial Team · Jun 27, 2026
◈ DEFINITION
What it means
Definition
A mutual fund pools money from many investors to buy a portfolio of stocks, bonds, or other assets. Unlike ETFs, mutual funds price once a day after the market closes — every buyer and seller that day trades at the same end-of-day NAV. They come in two flavors: actively managed (someone tries to beat an index) and passively managed (track an index).
◈ IN PRACTICE
Example
You put $5,000 into a mutual fund on Tuesday morning. Your purchase doesn't settle at the price you see on the screen at 10am — it settles at the fund's net asset value calculated after the 4pm close. If the market drops 2% that afternoon, you bought at the lower price.
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