A mutual fund is a pooled investment that allows you to invest in many different securities with a single investment. This means you put your money in and your money gets spread out within the stock market. It's also known as diversification.

Do mutual funds have diversification?

In summary, a mutual fund allows for diversification between many different stocks while also allowing for diversification between various sectors, styles, etc. Mutual funds can also invest in other assets, such as bonds, cash, or commodities like gold and other precious metals.

How mutual funds are diversified?

Generally, all funds offer diversification by investing in a broad array of securities. Investment funds in general will help investors diversify the idiosyncratic risks that can affect one security or a group of securities in a specific sector.