A mutual fund takes the investment capital of various individual actors and is managed overall by a professional financial analyst. The collection of funds is placed in various securities ranging from bonds and stocks and beyond. The entire goal of a mutual fund is to increase the overall value of the pool of capital in order to reap profits for all individual investors.

Although the general structure of mutual funds are the same, the individual assets in which they invest differs. A mutual fund will advertise the securities in which it invests, the overall goals of the investments, and a gauge of estimated returns. Mutual funds are generally seen as a safer and easier investment alternative for the average person when compared to individual stocks.