What is the primary objective of a mutual fund?

The primary objective of a mutual fund is to pool investors' money to invest in a diversified portfolio of securities. This pooling allows individual investors to collectively access a broad range of investments that they may not be able to afford or manage on their own. By investing in a diversified portfolio, mutual funds aim to spread risk across different asset types—such as stocks, bonds, and other securities—thus potentially enhancing returns while mitigating the volatility associated with holding individual securities.

Mutual funds are managed by professional portfolio managers who make investment decisions on behalf of the fund's shareholders, allowing investors to benefit from expert insights and strategies. This structure not only allows for diversification but also makes investing more accessible and manageable for the average investor, who might not have the time or expertise to build and manage a comprehensive portfolio.

The other options reflect different financial activities that do not align with the fundamental purpose of mutual funds. For instance, providing loans to investors is more akin to banking services, while managing retirement plans usually involves specific products like RRSPs or 401(k)s rather than the broader investment strategy of a mutual fund. Additionally, creating a real estate investment company pertains specifically to real estate investments and does not encompass the wider array of securities that mutual funds typically engage with.