What refers to the collective source of funds from numerous investors?

Mutual funds refer to a collective source of funds where money is pooled from numerous investors to invest in a diversified portfolio of stocks, bonds, or other securities. This investment approach allows individual investors to gain access to a wider range of investments than they might be able to achieve on their own, benefiting from professional management and diversification that reduces risk.

Investors purchase shares in the mutual fund, and the fund manager is responsible for making investment decisions on behalf of the shareholders. This structure is advantageous because it allows investors to gain exposure to various asset classes and markets while also minimizing the impact of individual investment risks.

In contrast, private equity funds primarily focus on investing directly in private companies or taking public companies private, which typically involves fewer investors and larger capital commitments. Publicly traded companies are distinct as they consist of individual companies that have shares listed on stock exchanges, and they might not represent a pooled fund structure. Alternative investments encompass a broad range of asset categories outside traditional stocks and bonds but do not necessarily imply the pooling of funds from many investors in the same collaborative manner as mutual funds.