What is a mutual fund?
A mutual fund is an investment vehicle made up of a pool of money collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and other assets.
If that made your head spin:
1. Try imagine you have a vegetable garden where you are growing different veggies.
2. The soil is the fund and the vegetables are shares and different securities from companies.
3. You own the soil, but you are not the one who decide on what to be planted. Someone else is doing that (a person from the bank). That person usually decides to put many different different vegetables in your soil to spread the risk since all veggies grows differently.
What gets to be in your soil will hopefully grow and get bigger. But since you are not really sure of which vegetables the bank person chose for you, there might be really nasty ones in there too. Your garden might be full of vegetables that you actually wouldn't like to be there.
It is the same case with mutual funds. The bank decides for you and that's convenient. But there might be companies in there that you would rather exclude from growing.
Ella puts pressure on the banks by giving you full transparency into what your funds are made of. With Ella, your funds are no longer just a fuzzy salad. It will have only the vegetables you decide to put there.