My friend, who is *not* economics savvy (any more than l am) has a goodly chunk (about 400K, wife is money) in mutual funds.Obviously the total value is currently tanking, but the bigger worry is - can the fund itself go bankrupt and leave them in the lurch, beyond any FDIC insurance?Any info much appreciated.Thank you!!

There is no FDIC insurance on funds. They are SIPC-insured in the event of fund management bankruptcy or malfeasance. But they are not protected against market loss. This is covered in the funds' prospectus.

They r not FDIC insured. The portion of the money that may be in money market funds (usually a step when the money is waiting to be invested) is SIPC insured. However, since that value probably represents less than 1% of the portfolio value, l doubt that brings much assurance. None of the stocks, of which a mutual fund is a make up of, r insured. If all the companies, as respresented by the stocks, within the mutual fund happen to go bankrupt, yes the fund is worth ZERO. However, you're suppose to have fund managers that keep a watch on things. And, those fund managers should know when to move the money from their stock picks to other stock picks or to bonds, or cash (e.g. money market account). So, if the fund managers r doing their job, then they fund would not die.

Yes, mutual funds do die but not in the same manner as a single stock would dropping below 1.00 and being de-listed. When a mutual fund dies they are closed and positions are liquidated, with any remaining value distributed among shareholders. Good question.