A mutual fund is an investment that allows individuals to invest alongside other investors in a group. The money is pooled together and used to purchase securities, such as stocks.
Often a mutual fund has a money manager who decides where the assets in the fund will be best invested to guarantee the highest rate of capital gain. One of the primary reasons mutual funds exist is to allow lesser investors access to large portfolios of stocks, bonds, and other assets, which they would not be capable of doing with their capital alone. In the United States there are three main regulations that go hand and hand when participating in a mutual fund: 1) The mutual fund must be registered with the Securities and Exchange Commision, 2) supervised by a board of directors, 3) and managed by an investment advisor.