Basic Points

• Mutual funds are a way to invest in a basket of stocks and other investment products for a longer term.
• Most of these funds are actively managed by a team of professionals, which means they will make trades for profit rather than hold the same positions passively, but also charge a management fee. 
• Mutual funds transact at the close of the normal trading window, at 4:00 PM ET time.

Intermediate: Features and Details of Mutual Funds

After 30 days, mutual funds become marginable, meaning that they consume Reg T Margin, usually with 25% initial margin requirements, which mean 4x leverage as compared to no leverage for the first 30 days. Mutual funds often will warn or penalize you (with suspension periods where reentering is not allowed) if you try to trade them more than once or twice in a short period. 

One logical reason why mutual fund managers would want to try and avoid that realized volatility in their fund is because it helps to lower their Sharpe and Sortino ratios and make the fund look better. Either way, they are strict about needing to hold them for a minimal period of time. Also, some brokers will add a penalty on them if they are closed within a period of about 6 months.  

The main thing to know is that mutual funds can only be traded at 4:00 PM ET with a market order. Mutual funds also can take hours or days sometimes before their results are synced with the account balance.

Another idiosyncratic detail is that, like futures, mutual funds will not necessarily register under beta-adjusted metrics such as SPX. 

Another key point to watch out for with mutual funds is how they can have a variety of hidden fees which need to be researched case by case. Front Load is a sales fee for joining, and Redemption Load is a fee for closing it. Here you can also see JHEXQ asking for a 1-million minimum deposit (via Morningstar):

It is also important to verify that a mutual fund is “no load”, or at least be aware of that fee. This is whether the broker will charge extra for it beyond the normal commission.

<Confirmation of No-Load status on the mutual fund from TD Ameritrade>

Sometimes they will offer no-load on more vanilla funds, while offering a load premium for the more rockstar funds, or most funds pertaining to Fidelity (starting with F) or Vanguard (starting with V). Another identifiable characteristic of mutual funds is that they are usually 5 letters, and end with an X.

One of the major draws of mutual funds, for better or worse, is that they tend to be actively managed. While most fund managers struggle to outperform the SPIVA scorecards (which baseline performance from the S&P 500), it is comforting to have some allocation in funds that are actively managed and rebalanced by professionals. However, they cannot be traded like normal stocks and are much less liquid. Some of them are quite high profile, such as JHEQX.

<Mutual fund profiles retrieved from Morningstar>

Also, many mutual funds are closed to new investors or those without a minimum deposit, such as 1 million for JHEQX. These restrictions might not be obvious until opening up the mutual fund at a broker and then seeing a popup detailing the restrictions. It is also common for brokers to have different availability for specific mutual funds. This would include either a sales tax on joining the fund, and/or a tax for exiting the fund. Below are the main items which help to define a mutual fund, which are key to know when shopping for them. 

Key risk metrics are also important, such as alpha, beta, and Sharpe, which all reveal important behavioral details of its price action and performance.