Liquidity

Mutual funds are required by law to redeem shares on a daily basis, based on shareholder requests to sell their shares. Therefore, mutual funds can be considered a liquid investment in the sense that investors can be assured of cashing out in a reasonably timely fashion when they choose to do so. (Of course, when a shareholder redeems his or her shares, the price of the fund may have dropped, resulting in a loss to the shareholder.)