Fund

A fund is a basket of securities. Depending on the fund, investments are made in stocks, bonds, or other assets (e.g., precious metals or real estate). A fund can consist of only one asset class (e.g., an equity fund) or multiple asset classes (e.g., a strategic fund). Funds are considered less risky than direct investments. This is because funds spread the risk through diversification: Instead of relying on individual securities, the capital is distributed across many different investments. If the value of a single company declines sharply, these losses can be offset by the performance of the other investments.