Investment funds are made up of various securities like stocks and bonds. There are different types of funds, including the following:
Exchange-Traded Funds (ETFs): ETFs are predetermined baskets of securities sold in shares, just like stocks. When you purchase an ETF, however, you purchase partial shares of dozens to hundreds of stocks.
Mutual Funds: Mutual funds are professionally managed portfolios that trade once a day on the Net Asset Value (NAV) of the whole fund.
Index Funds: Index Funds are baskets of securities that contain most or all of the funds within a specific index, like the S&P 500.
Funds might be open-end or closed-end. Open-end funds are typically mutual funds that trade once per day on the NAV, while closed-end funds trade more like stocks and aren’t limited to the NAV.