A mutual fund is a professionally managed investment fund that normally pulls money from many investors to purchase securities. The term is typically used in the US, Canada, and India, whereas similar structures across the globe include the SICAV in Europe (investment company with variable capital) and open-ended investment company (OEIC) in the UK.

Mutual funds are often classified by their principal investments: money market funds, bond or fixed income funds, hybrid funds, stock or equity funds. Funds can also be categorized as in index funds, which are passively managed funds that can track the performance of an index, such as a stock market index or bond market index, or actively managed funds, which seek to outperform stock market indices but generally charge more fees. Open-end funds, closed-end funds, and unit investment trusts are primary structures of mutual funds.

We can say mutual funds have disadvantages and advantages compared to direct investing in individual securities. The advantages of mutual funds include economies of scale, liquidity, diversification, and professional management. However, these come with mutual fund expenses and fees.

Mutual funds are regulated by governmental bodies and are required to publish information including performance, comparison of performance to benchmarks, fees charged, and securities held. A single mutual fund may have several share classes by which larger investors pay lower fees.