What are Mutual Funds?
When you purchase shares of a mutual fund, you’re pooling your money with other investors and letting the mutual fund (which is simply a professional money management company) invest and manage the money to help meet the fund’s specified investment goal (e.g., growth, income, or a combination of the two).
Companies list their shares to trade in the public markets for the first time in an initial public offering, or IPO. In doing so, they offer investors an opportunity to share in company profits but also expose investors to the risk of financial loss. Mutual funds are investment vehicles run by professional money managers. Fund managers combine the investment capital of multiple investors together and invest across stocks and bonds. Some mutual funds focus on buying IPO shares.
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Below are some of the key takeaways from investing in IPO’s with the assistance of a mutual fund.