Mutual funds make up a large portion of America’s retirement funds and investments. Understanding how these funds operate should be a big part of anyone’s financial knowledge. Salman Khan of the Khan Academy outlines a hypothetical example of how an open-ended mutual fund works with its investors.
From this first video, you’ll understand:
- The nature of an open-ended mutual fund
- How investors take shares in a mutual fund
From this second video, you’ll understand:
- What Net Asset Value (NAV) means in the context of a mutual fund
- How redemptions force managers to keep some assets in cash