Mutual funds are a type of investment instrument that combines money from different individuals to buy a diverse portfolio of stocks, bonds, and other securities.

Each investor owns a portion of the mutual fund, represented by shares, and is entitled to a portion of the fund’s returns, which are generated from the underlying securities.

Mutual funds are managed by professional fund managers, who make investment decisions on behalf of the investors based on the fund’s stated investment objective.

Investors can buy or sell mutual fund shares on any trading day, and the value of the shares is determined by the net asset value (NAV) of the fund, which is determined by dividing the entire value of the fund’s assets by the number of outstanding shares.

Mutual funds are a popular investment option due to their diversification, professional management, liquidity, and accessibility to small investors.