What Are Mutual Funds ? : The money pooled in by a large number of investors is what makes up a Mutual Fund . It is a trust that collects money from a number of investors who share a common investment objective. Then, it invests the money in equities, bonds, money market instruments and/or other securities. Each investor owns units, which represent a portion of the holdings of the fund. The income/gains generated from this collective investment is distributed pro portionate