A mutual fund is a kind of investment that uses money from many investors to invest in stocks , bonds or other types of investment . A fund manager ( or `` portfolio manager '' ) decides how to invest the money , and for this he is paid a fee , which comes from the money in the fund . The types of securities that a particular fund may invest in are set forth in the fund 's prospectus , which describes the fund 's investment objective , investment approach and permitted investments .