A mutual fund is a collection of stocks, bonds and other investments that are owned by a large group of investors and managed by a professional investment company. When you put money into a fund, you buy shares, or units, of the fund, which pools your money together with money from many other people and then invests it on your behalf.

Mutual funds are created by financial institutions, such as independent mutual fund companies, brokerage firms, banks and insurance companies. Each fund has an investment objective - it might be preservation of capital, growth, or a combination of both - and a professional investment manager who decides what investments to buy and sell. The manager's employees include financial analysts, accountants, traders and sales and support staff.