A mutual fund is a professionally managed investment vehicle made up of money collected from investors in order to invest on their behalf. Mutual funds invest this money in securities like stocks, bonds, money market instruments, and generate returns for its investors.

In simple words, a mutual fund collects money from several investors like you, and invests it in various investment options like shares, bonds, etc. 

The investors decide if a mutual fund is good for their investment basis an offer document which defines its objectives and outlines how it will be investing. eg: a large cap fund will invest only in large cap shares. 

The income earned through these investments and the capital appreciation realised are shared by its unit holders in proportion to the number of units owned by them. 

This fund is managed by experts. A fund manager from an Asset management company is responsible for your allocation of funds and decides where to invest the money. They can also shuffle the mutual funds based on market performance. 

A mutual fund is an easy way for investors to invest in a diversified, professionally managed basket of securities at a relatively low cost.