Many people think mutual funds are a type of investment just like stocks or bonds.
Actually, they're just a way to invest in one or more of these types of securities. When you buy shares in a mutual fund, you pool your money with other investors to buy those stocks or bonds. Funds have different goals, called investment objectives. A fund's goal determines what kinds of securities it buys and guides a professional manager in picking individual securities for the fund to buy. The fund's prospectus can tell you what its investment objective is.