Name one characteristic of a mutual fund.

A mutual fund is characterized by its ability to pool money from multiple investors in order to purchase a diversified portfolio of securities. This structure allows individual investors to have access to a wide range of assets that they might not be able to invest in on their own due to financial constraints or lack of expertise. By combining resources, mutual funds can invest in a variety of stocks, bonds, or other securities, which helps to spread risk and increase potential returns. This diversification is a fundamental principle of mutual funds, providing benefits such as professional management and lower transaction costs for investors.

The other choices do not accurately describe the nature of mutual funds. Investing solely in a single asset contradicts the fundamental principle of diversification that mutual funds offer. Limiting investments to only real estate would define a specific type of fund, such as a real estate investment trust (REIT), rather than the broad category of mutual funds. Lastly, stating that a mutual fund is structured as a private company does not hold true, as mutual funds are typically registered as open-end investment companies and must adhere to regulatory standards that allow them to offer shares to the public.