What type of fund pools money from multiple investors to purchase stocks, bonds, or other securities?

The correct answer, mutual fund, refers to a specific type of investment vehicle that aggregates money from numerous investors to invest in a diversified portfolio of stocks, bonds, or other securities. This pooling of resources allows individual investors to gain access to a broader range of assets than they might be able to afford if investing on their own.

Mutual funds are managed by professional portfolio managers who make investment decisions based on the fund's stated objectives, thus offering investors an opportunity to benefit from expert management and diversification with a relatively low minimum investment. The structure of mutual funds also provides liquidity, as investors can typically redeem their shares on any business day at the current net asset value.

Other types of funds mentioned, such as exchange-traded funds (ETFs) and hedge funds, also pool investor money, but they operate under different rules and frameworks. ETFs usually trade on exchanges like stocks and can often be more tax-efficient due to their structure. Hedge funds, on the other hand, typically cater to wealthy, accredited investors and may employ various strategies, including derivatives and short selling, which are not common in mutual funds. Retirement funds, while they may also pool money for investment, are not specific to acquiring a diversified pool made up of securities but often serve a specific