This chapter describes mutual funds as an investment alternative. We begin our discussion by considering why investors purchase mutual funds. Then, we examine the characteristics of closed-end funds, exchange-traded funds, and open-end mutual funds. The differences between load funds and no-load funds and the different fees associated with mutual fund investing are explained. We describe the major categories of mutual funds in terms of the types of securities they invest in. Finally, methods that can be used to evaluate mutual fund investments and the mechanics of mutual fund transactions are presented.