What Is a Mutual Fund?

Rookie investors might wonder "what is a mutual fund?" Here, we answer that question and look at the pros and cons of trading one.

mutual funds written on white paper in black in on top of one hundred dollar bills
(Image credit: Getty Images)

Next year, Wall Street will observe the centennial for one of investing's most critical and ubiquitous vehicles: the mutual fund.

OK. Technically, mutual funds have existed in some form since the late 19th century. But the modern, open-ended mutual fund we know and love came to life on March 21, 1924, with the birth of the Massachusetts Investors Trust (MITTX), still offered up today by MFS Investment Management.

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Kyle Woodley

Kyle Woodley is the Editor-in-Chief of WealthUp, a site dedicated to improving the personal finances and financial literacy of people of all ages. He also writes the weekly The Weekend Tea newsletter, which covers both news and analysis about spending, saving, investing, the economy and more.

Kyle was previously the Senior Investing Editor for Kiplinger.com, and the Managing Editor for InvestorPlace.com before that. His work has appeared in several outlets, including Yahoo! Finance, MSN Money, Barchart, The Globe & Mail and the Nasdaq. He also has appeared as a guest on Fox Business Network and Money Radio, among other shows and podcasts, and he has been quoted in several outlets, including MarketWatch, Vice and Univision. He is a proud graduate of The Ohio State University, where he earned a BA in journalism. 

You can check out his thoughts on the markets (and more) at @KyleWoodley.