ABSTRACT
This chapter is the foundation of the book. It defines mutual funds and explains their importance in financial markets and their organisational forms. It describes the array of unique advantages offered by mutual funds to the investors that have contributed to the success of this industry and the main service providers involved in their operations. It compares mutual funds with hedge funds to demonstrate the traditional distinction between the two. It also classifies mutual funds into different categories based on their structure and investment objectives and examines the legal nature of open-ended investment companies and unit trusts, which are the main mutual fund forms in the UK.
