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An investment fund is any fund that manages money. There are two basic types, open-ended mutual funds, also known as unit trusts, and closed-end publicly quoted funds, also known as investment trusts. Both are ways of pooling funds to allow investors to diversify their investment assets. Open-ended funds sell shares or units to the public. Each one represents proportionate ownership of the underlying assets of the fund. Fund managers can create more shares, or reduce the total, according to demand from the public. A closed-end fund has a predefined and fixed number of shares available to the public. Fresh demand for investment in the fund will push up the price of existing shares, allowing the fund manager to issue more shares.
See also: Hedge Fund