They are relatively simple to understand, the initial investment is usually small and they allow average investors to access some of the best professional money management in the world.
Mutual funds are also easy to buy and sell and offer daily pricing.
However, most mutual funds are not tax efficient. I have had many conversations with investors who are caught unaware of the tax risks associated with most mutual funds. A distribution is caused by the fund manager selling a stock or bond position for a profit. When the fund holds stocks and bonds that rise in value, a manager will often sell all or a portion of the position to lock in profits. By doing so, he has also locked in a tax burden for the shareholders.