Any collective investment scheme that involves pooling money from a number of investors at one time, to make investments in stocks, money market instrument for short term, bonds and other types of securities is what a mutual fund is defined as. The net profits or losses are thus distributed equally among all those investing every year.
A generic term for a collection of investment vehicles, the mutual funds depending on the objectives and its assets entails equity, debt and even other financial instruments. These are also defined as companies that reinvest the money of their investors and thus hold a high liquidity by being divided into shares and being bought the way stocks can be purchased.
