It depends on the fund. Mutual funds have a prospectus that defines exactly how they’ll behave. Some funds leave room for management discretion while others are almost mechanical. They make their holdings public, so you know exactly what they’re composed of. I don’t think there’s much limit on what they could buy, it’s defined more by the strategy of the fund.
Does that answer your question? I wasn’t really even sure what you were asking just doing my best to be informative.
They also buy back shares and reduce their shareholders.
The ROI will drop if companies have too much money.
That just shifts my question. What can those funds buy?
It depends on the fund. Mutual funds have a prospectus that defines exactly how they’ll behave. Some funds leave room for management discretion while others are almost mechanical. They make their holdings public, so you know exactly what they’re composed of. I don’t think there’s much limit on what they could buy, it’s defined more by the strategy of the fund.
Does that answer your question? I wasn’t really even sure what you were asking just doing my best to be informative.