A mutual fund is a company that makes investment decisions for its owners who are known as shareholders. Think of buying a mutual fund in the same way you would buy a condominium. You get the benefits of home ownership without having all of the worries and chores of owning a single home. You are part owner of the whole building when you own a condo. Similarly, when you buy shares of a mutual fund, you are part owner of 100’s of different securities with thousands of owners just like you.

Selecting the companies that are being bought and sold is the job of the managers of the fund, know as portfolio managers. So, you do not have to worry about researching the company’s financials, or making ongoing decisions whether to continue to hold them or sell them.