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Can mutual funds trade on margin?

April 26, 2017margin Mutual funds Trade

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Can mutual funds trade on margin?

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While some brokerage firm margin policies may allow for an investor to borrow against their mutual fund positions, mutual funds themselves are prohibited from trading on margin. Additionally, mutual funds are also prohibited from selling short to participating in joint trading ventures. Because funds are prohibited from thee more speculative trading practices, investors often form limited partnerships and other legal entities to bypass these rules.