Mutual Funds are a very common way of investing. In theory they are a professionally managed investment that is diversified into a range of securities including stocks, bonds and other securities. The person who manages the fund is known as the "Fund Manager" or "Portfolio Manager". It is the fund managers responsibility to buy securities taking a speculative view that they will appreciate in value.

There are many people who have some money to invest and would like to earn a better rate than the basic benchmark rate. Investing in mutual funds offers the opportunity to do this in a trade off for some risk. It is important one does some research on different mutual funds because a lot of products on the retail market are very poor. One thing to be weary off with mutual funds is the fund managers get paid even in they perform very poorly, so they are essentially earning commissions and earn well if they lose some of your funds.

There are many different types of mutual funds, the major types are:

Exchange Traded Funds

These are relatively new and are aimed to track a specific security. Common ETFs track major stock indices, commodities and metals.

Equity Funds

These mutual funds are the most popular. They invest a large proportion of the pool into stocks.

Bond Funds

These funds invest in both government and corporate bonds. Often it is better to buy the bonds directly.

Fund of Funds

These funds invest in a selection of mutual funds, in an attempt to give you a diverse portfolio. They are often best suited to people who don't currently have enough money to invest in a broad range of mutual funds.