A mutual fund is a company that pools money from investors and invests it in securities like stocks, bonds, and short-term debt. Investors buy shares in mutual funds, which represent their part ownership in the fund and the income it generates. When investors buy shares in a mutual fund, they essentially acquire a stake in the fund’s entire portfolio, proportional to the number of shares they own. This ownership entitles them to a portion of the fund’s income, generated through dividends, interest, or capital gains realized from buying and selling securities.