What is a Mutual Fund?

A mutual fund is an investment that pools money from many investors, and that money is used to invest in stocks, bonds and other securities. One mutual fund share includes a portion of a share of each stock held in the fund's portfolio.

Who Decides What a Mutual Fund Invests In?

Mutual fund managers decide what securities to buy or sell guided by the mutual fund's objectives. If a mutual fund's objective is to invest in the energy sector, the manager cannot buy shares in technology stocks. Fund objectives let you know what to expect now and in the future.