A stock fund is a type of investment fund that pools money from multiple investors to purchase a diversified portfolio of stocks. Instead of buying individual shares, investors buy units of the fund, giving them partial ownership of the entire basket of stocks held. This approach makes it easier for people to gain exposure to the stock market without needing to pick and manage individual companies themselves.

Stock funds are typically managed by professional fund managers or follow a set strategy, such as tracking a stock market index. There are different kinds of stock funds, including growth funds, value funds, index funds, and sector-specific funds. Each has its own focus, such as targeting high-growth companies, undervalued stocks, or a particular industry.

The main advantage of stock funds is diversification. By spreading investments across many companies, the overall risk is reduced compared to putting money into a single stock. They also provide convenience, as the fund manager handles research, stock selection, and portfolio management. However, like all equity investments, stock funds carry risks, including market downturns and potential losses.

Returns from stock funds come from two main sources: capital appreciation, when stock prices rise, and dividends, which are distributed profits from the companies owned by the fund. Stock funds are commonly used for long-term wealth building, including retirement savings.