Fund
A fund is a pool of money that is allocated for a specific purpose. In the realm of investments, some types of funds include: **Mutual funds** are investment funds managed by professional managers who allocate the funds received from individual investors into stocks, bonds, and/or other assets. **Money-market funds** Examples include mutual funds, which gather money from numerous investors and invest it in a diversified portfolio of assets, and hedge funds, which invest the assets of high-net-worth individuals (HNWI) and institutions in a way that is designed to earn above-market returns. A fund can be established for many different purposes: a city government setting aside money to build a new civic center, a college setting aside money to award a scholarship, or an insurance company that setts aside money to pay its customers’ claims. A fund is a pool of money set aside for a specific purpose. Some common types of funds include pension funds, insurance funds, foundations, and endowments.
What Is a Fund?
A fund is a pool of money that is allocated for a specific purpose. A fund can be established for many different purposes: a city government setting aside money to build a new civic center, a college setting aside money to award a scholarship, or an insurance company that setts aside money to pay its customers’ claims.
How Funds Work
Individuals, businesses, and governments all use funds to set aside money. Individuals might establish an emergency fund — also called a rainy-day fund — to pay for unforeseen expenses, or a trust fund to set aside money for a specific person.
Individual and institutional investors can also place money in different types of funds with the goal of earning money. Examples include mutual funds, which gather money from numerous investors and invest it in a diversified portfolio of assets, and hedge funds, which invest the assets of high-net-worth individuals (HNWI) and institutions in a way that is designed to earn above-market returns. Governments use funds, such as special revenue funds, to pay for specific public expenses.
Common Types of Funds
The following are examples of funds commonly used for personal ventures:
In the realm of investments, some types of funds include:
The government also creates funds that are allocated for various reasons. Some government funds include:
Related terms:
Bond Fund
A bond fund invests primarily in bonds (government, corporate, municipal, convertible) and other debt instruments to generate monthly income. read more
What Is a Capital Asset?
A capital asset is an asset with a useful life longer than a year that is not intended for sale in the regular course of the business's operation. read more
Certificate of Deposit (CD)
A certificate of deposit (CD) is a bank product that earns interest on a lump-sum deposit that's untouched for a predetermined period of time. read more
Commingling (Commingled)
In securities investing, commingling (commingled) is when money from different investors is pooled into one fund. read more
Endowment Fund
An endowment fund is an investment fund set up by an institution that makes regular withdrawals from invested capital to fund ongoing operations. read more
Managed Account
A managed account is an investment account that is owned by one investor but is overseen by a professional money manager or management firm. read more
Mutual Fund
A mutual fund is a type of investment vehicle consisting of a portfolio of stocks, bonds, or other securities, which is overseen by a professional money manager. read more
Treasury Bills (T-Bills)
A Treasury Bill (T-Bill) is a short-term debt obligation issued by the U.S. Treasury and backed by the U.S. government with a maturity of less than one year. read more
Trust Fund : Types & How They Work
A trust fund is a legal entity that holds and manages assets on behalf of another individual or entity. read more