3.1. Mutual Funds

The mutual fund is the best-known investment company product. A mutual fund is an investment portfolio managed by a professional investment adviser, so mutual funds offer sophisticated investment management that most investors would not be able to achieve on their own.

Mutual funds provide diversification against unsystematic risk. Unsystematic risk (also called non-systematic risk) is a type of risk that is specific to a company or an industry. For example, a software company faces the risk of not keeping up with ever-changing hardware. This is unsystemat