What constitutes a mutual fund?

A mutual fund is defined as an investment vehicle made up of a pool of money from many investors. This structure allows individual investors to combine their resources to invest in a diversified portfolio of securities, such as stocks, bonds, or other assets, managed by professional fund managers. By pooling funds, investors can access a broader range of investment opportunities and benefit from diversification, which helps mitigate risk compared to investing in individual securities.

In contrast, the other options focus on narrower investment strategies or methods. A fund limited to real estate investments describes a specific type of fund, such as a real estate fund, but does not capture the general nature of mutual funds. A vehicle that invests exclusively in cryptocurrencies does not align with the typical mutual fund structure, which often includes a mix of different asset types. Finally, a method for trading stocks on one's own pertains to self-directed investing rather than the collective pooling nature of mutual funds, where decisions are made by a management team on behalf of all investors.