A mutual fund is a pooled investment vehicle that holds a portfolio of securities — stocks, bonds, or a mix — on behalf of many shareholders, managed by a professional advisor. Shares are issued and redeemed at the day-end NAV (net asset value); there is no intraday trading in the fund itself. Mutual funds dominated retail investing for half a century before ETFs displaced most of their growth, and they remain prevalent inside employer retirement plans where ETF access is limited.
The structural feature that matters for taxable accounts is the annual capital-gains distribution mandated by IRC §851, “Definition of regulated investment company” and IRC §852: realized gains inside the fund must be passed through to shareholders each year, regardless of whether the individual shareholder sold. That is the wrapper inefficiency that pushed serious taxable money into ETFs and direct indexing in the first place. The investor-side mechanics — fee structures, share classes, NAV vs. market price, tax efficiency, how to actually pick a fund, and the case against mutual funds in large taxable accounts — are in section “Mutual Funds”.