ABSTRACT
In this chapter we examine investment funds, which are financial products that combine into portfolios the debt and equity securities discussed in the last two chapters. We begin with a review of why and how investment funds are used and the role diversification plays in the creation of funds. We then consider the main types of investment funds, including open-end funds, closed-end funds, hedge funds, and exchange-traded funds, and the strategies that portfolio managers use to create investor returns. We conclude by describing how different classes of investment fund shares are created, traded, and redeemed.
