What’s “mutual” in Mutual Funds? Does it mean “Cooperative”?
The “Mutual” in mutual funds doesn’t mean a cooperative.
In mutual funds, you pool your money with other investors — retail or institutional. This “mutual” fund becomes a bigger capital pool which a professional fund manager invests in asset vehicles specified by the fund (fixed-income funds, equity funds, balanced funds, and money market funds). Ownership depends on the number of shares you put in.
In a cooperative, you join a group of user-owners for “mutual” benefit. As a member, you contribute capital and control the cooperative based on a one-member, one-vote principle (not on your amount of capital contribution).
Money question answered by Carissa Patag
Carissa Patag is a licensed stock broker, mutual fund agent, real estate agent, bonds and fixed rate instrument trader, insurance agent, and Registered Financial Planner. She was Associate Director and Head of Retail Sales and Marketing, Vice President, Fund Manager, and Certified Securities Representative. As a financial literacy advocate, she worked as Advisor and Contributor of Angat Pilipinas Coalition for Financial Literacy and served as speaker in corporate and academic circles. She advocates investing in the equities market and mutual funds through prestigious financial institutions like Wealth Securities and PhilEquity Fund, one of the country’s oldest and longest-running mutual funds. She has business interests in the retail, pharmaceutical, and trading industries, and sits on the board of various corporations.
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